Commonsense Tips for Building Your Exit Plan

Preparing your business for sale is a time-consuming undertaking that requires skill and creativity. You’ll be most effective at selling your business if you work with an advisor on a thoughtful exit plan tailored to the specific demands of your market niche. No matter where you sell or to whom, though, these tips can help you get ready and successfully exit:

1. Build a strong management team, starting at the top, and reduce or eliminate your company’s dependence on you as owner.
2. Get your books in order. This prepares you for the process of due diligence, and makes it easier to identify problems early in the process, before they disrupt the sale.
3. Document business processes and systems so that a new owner has all the information they need to operate the company from day one.
4. Perform an inventory of all assets. If these assets will be included in the sale, you must know their value so you an appropriately price both the company and its assets.
5. Construct a sale advisory team. Distinct from your board of directors, your sale advisory team doesn’t have legal fiduciary duties. Instead, they’re advisors who offer expertise and support. Bring in people you trust with a variety of backgrounds—and make sure they’re people who will stand up to you if they think you’re wrong.
6. Review your insurance policies. Now is the time to make sure your company has adequate insurance for every major risk of liability.
7. Design and test a disaster recovery plan. The pandemic made clear how important it is to be flexible in the wake of a disaster. Now’s your chance to prove your mettle before the next disaster strikes.
8. Hire an outside firm to perform an audit of operations. This should help with assessing customers, management structure, marketing, and more, so you can make meaningful improvements while you still have the chance. Do not do this internally, or you’ll end up with a useless, biased report. Then address any issues the audit identifies before moving forward.
9. Hire a valuation firm. Here again, it’s critical that the report comes from an unbiased outside firm that compares your company to competitors and identifies specific value drivers.
10. Hire a legal team to perform a comprehensive contract review. Then draw up appropriate agreements to incentivize key team members to stay on board.
11. Begin networking. This is a critical and often overlooked aspect of the marketing process. The aim here is to identify potential buyers ahead of time, and to drum up interest in your company at a time when you’ll need it most.
12. Hire an expert to help sell your company. The right brokerage firm can help you find highly qualified buyers, oversee the sale process, set reasonable expectations, and more. Bring in an outside expert early to help oversee the process, and you’ll save time and money, while potentially increasing the total sale value when the time comes.