You have been at helm of your Georgia based business your head down and nose to the grindstone for years now. After dealing with customers, suppliers and employees for so long you’ve built a well-oiled machine that is growing on both the top and bottom lines each year. The hard work has paid off and you are now a market leader in the sector, niche, and geography.
While your business has expanded, supported your family and your workforce time has forged on and you’re suddenly approaching retirement. Do your kids want to take over the business? Do you want to sell it to your employees? Are you just going to hold it forever?
The real question is, do you have an exit plan?
Whatever you think you want to do, even if you are unsure, it always best to put your thoughts down on paper and begin the process of formulating and exit plan. Whether you end up selling to a strategic or private equity buyer or keeping the business in the family, planning an exit strategy is something that takes years so it is best to begin the process sooner rather than later.
So even if exiting is still three, five, or even seven year out, it is never too soon to begin exit planning. Below are a few aspects you can consider when beginning the exit planning process:
· Get your ducks in a row. Good records and financial statements are things that any potential buyer will want. Whether or not your business has a full-time CFO, it is important to work in conjunction with a CPA to ensure you have GAAP compliant financial statements that will give a potential owner a clear view of the financial picture. It is also good to have an annual EBITDA calculation so that you can apply it to rough industry multiples so that you can determine a value range for your business. Beyond financial statements, additional records to have in an orderly fashion include buy-sell agreements, environmental documents, leases, corporate documents and more. Basically, any paperwork that documents any aspect of your business is something you should have handy when planning your exit strategy.
· Determine your goals. The process of exiting your company can be tedious and emotional so before getting too deep into the process it best to sit down with your family members or advisory team to understand exactly what it is you are looking to do. Are you looking to maximize the value of your business at all costs? Is it about more than dollars? Do you want your employees to be well taken care of? Are you willing to work in your business under a new ownership group? One good way to hash out all of the questions is to outline all your ideas on a sheet of paper and really prioritize what is most important, what you can live with and what you can live without. Sometimes knowing what you don’t want is just as important knowing what you want.
· Find a trusted advisor. Ok, you’ve decided to sell. How do you do it? If you are planning to exit your Atlanta business through a sale to a strategic competitor or private equity group you will more than likely want to hire a business broker or investment banker to guide you through the process. This person will help with a number of things including positioning your business in the best light, compiling a Confidential Information Memorandum, developing a list of potential buyers or investors and negotiating on your behalf. This is the person or firm that you will entrust to steward your business through what is likely the most important transaction of your life. You will want a broad range of references and you’ll want to interview a number of groups so that you can be sure that you are working with a team that you trust. Beyond business acumen, you’ll want to be sure that your personalities mesh and that there is a high level of trust. You’ll also want to have a good team of attorneys and accountants that you can lean on throughout the process. You more than likely already know these people, but if you don’t, it is good to begin the process of interviewing people.
Starting to plan earlier rather than later is always optimal. Exiting a business takes a lot of planning. Be sure that you assemble the right team and have the right data to ensure you can achieve all your exit goals.