Exit Planning Through The Coronavirus Pandemic – A 6 Step Guide

THE 6-STEP EXIT PLANNING PROCESS DURING THE CORONAVIRUS PANDEMIC

 

Step One – Establish Your Goals and Expectations

It is important to remember that this time will pass.

During this time, taking the proper steps to prepare your business for sale is essential to being positioned properly to gain the attention of investment groups, private equity firms, and individual buyers – all of whom are still seeking acquisitions during this time period.

What would you like to achieve with your exit? When? For many owners, it isn’t simply one thing. Often, it is financial security or diversification. It could be a desire to involve children or to reward key employees. Perhaps it’s to achieve the freedom to enter the next chapter of life. Whatever it is for you, it’s important that you spell out your goals.

Step Two – Get Your Financials In Place

Do you know what it would take to be financially independent outside of your company? A thorough analysis will determine the financial resources necessary to sustain your lifestyle after exit. The results define the Value Gap between your projected assets and what’s needed to meet your goals. Additionally, you must assess your mental readiness for exit. What will you do after exit? How do you feel about being identified as someone other than the owner of your firm? The mental game is often more challenging than owners think.

Business buyers will want to see how your business is faring during this time. It is expected that the majority of businesses are facing slower revenue generation, however, if your business has a strong plan to recover, and you are taking steps to ensure profitability in the months ahead, then your business will stand out moving forward.

Properly organizing your financial information is a step you must take – and an experienced M&A Advisor team can help you do just that.

Step Three – Determine your reason for Exiting.

Business owners typically fall into four categories based on their financial/mental readiness. Your exit options become clearer once you recognize your owner type and the corresponding transfer methods. Who do you resemble?

• Rich and Ready To Go – Financial readiness is high, and mentally you can’t wait to start life’s next chapter.
• Wealthy But Enjoy Work – You are financially set, but you like working and don’t want to retire.
• Stay and Grow – You’re not financially ready, and are happy to work to build net worth and company value.
• Get Me Out Now – Your needs require much from the business, but mentally you are headed for the exits.

Step Four – Discover Your Options

If you are like most business owners during this time, you are wondering what your options for exiting to the right buyers are.

In this time, we are receiving numerous requests, letters of intent, and mandates from private equity groups, investment groups, private buyers, and industry players regarding our clients.

Step Five – Understand the Value of Each Option

It’s not what you make, it’s what you keep! You must run the numbers for each of the applicable exit options. You’ll learn about the range of values associated with private companies, the impact of taxes and fees on any transaction, and the cash flow results for both you and the business throughout the exit. You’ll want to know this well before executing the plan.

Step Six – Execute Your Strategy – Protect Your Wealth

You’ve chosen your option, made your plan, and now it’s time to execute. Assemble your team, plan for contingencies, and take action. You’ll learn how to help protect your wealth from estate taxes and provide for plan completion in the event of an untimely death or disability.

 

We are here for you if you have questions about selling, and ready to help you get started when you are ready.

While this will not substitute for a professional, detailed valuation – this online tool can help you see an estimate of what your business could be worth in the market –