Many founders, owners or CEOs spend their career building a successful business. It involves making strategic business decisions, picking the right personnel, reading market trends and creating products and services. It is smart leadership and due diligence. Still, when it comes time to sell the company, many do not take the time to formulate a sound exit strategy.
Owners’ eventual exit is inevitable, and how they plan it can be the difference between ensuring a lifetime’s work continues with new stewardship or getting dismantled for parts. Planning better ensures that the sellers see their desired outcome.
Consider a valuation
It can be helpful to get a professional valuation. Before entertaining solicited or unsolicited offers, this may give the owner a benchmark. This process can also identify strengths and weaknesses and the overall market position.
Determine the ideal buyer
The sellers should focus on who they want to sell to. For example, some may want to sell to the highest bidder for cash and, if they are still active in the business, they might quickly retire. Others would accept rollover equity and may wish to remain active as consultants, employees or board members, with or without involvement in day-to-day operations. Do you want to sell it to a strategic business, a private equity firm that may reorganize it and resell it, or keep it for family or key employees? Create a succession plan if the latter option is most desirable.
Establish a timetable
When to step back is another consideration. The answer could be shortly after upon sale or a multistep plan that takes much longer. The sellers’ willingness to stay involved for a transition may have a bearing on the potential buyer’s decision. The intelligent sellers also need to plan for the unexpected, such as illness, death or even an unexpected offer that is too good to pass up.
Be Aware of Impact on Employees
An inner circle of key personnel might need to be in the loop early in the sales process. But, owners might wait until a deal is certain before sharing the news with the full team. Rumors about a change of ownership can affect morale and can even cause people to see other employment. So, owners should stay on top of the rumor mill and decide when to share the status with your people. Sometimes retention bonuses are needed to motivate people to stay.
Consider an advisory board
Founders may want an advisory board to help plan the transition. These people would include experts in their fields who understand the industry and have leadership skills.
Work with attorneys
Another piece of the puzzle is using a law firm attorney skilled at structuring and negotiating complex business deals and drafting effective contracts to implement them. These legal professionals can provide strategic guidance focusing on the client’s best interests and goals