What is Your Exit Strategy?

Are you a business owner? Or do you advise business owners? If so, one issue that should be front and center is that of exit strategy.

Exit strategy can consist of several options:

  1. Pass the business on to a younger family member or a key employee
  2. Sell to an outside buyer (preferred)
  3. Close the doors and liquidate

Option one may not be in the cards. Option three is a terrible waste of the enterprise you’ve built. So option two is the clear preferred choice. Actually this alternative may also address option one.

Let me elaborate.

What is the Value?

Selling a business is a bit tricky. First of all, how much is it worth? How do you come up with a realistic value to present to a potential buyer? A Certified Valuation Analyst (CVA) is experienced in calculating the fair market value of a business, using a variety of valuation approaches.

In the interest of full disclosure, it just so happens that Kathy Lyle is an accredited CVA.

A business may have several different values, depending upon the buyer. For example, a competitor or similar strategic buyer might be willing to pay a premium price. An insider, such as a key employee or close family member, will have a different expectation. And an outside buyer (the proverbial guy off the street) will want to do a much greater amount of due diligence.

As a seller, you must be familiar with the various approaches to the valuation of your business in order to negotiate the best price, and you must also understand the due diligence process and how to best position yourself for a sale.

Should you need help in the process we’re here to assist.

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