Three Elements of a Strong Exit Strategy

strong exit strategy

It’s commonly accepted that entrepreneurs should put a lot of thought and planning into getting into a new business. What is not as commonly known is that exiting your business requires just as much planning. When you are the subject of a buyout or otherwise turn your business over to a new owner, you want to put the right forethought into how you go about exiting. Learn the important value and the critical elements of having a strong exit strategy when you transition your business to new ownership.

Timing the Exit Strategy

Timing is everything, and leaving your business is no exception. You need to keep in mind that the sale of your business isn’t going to be a simple exchange of cash and walking away. These things take time, and you want to make sure that not only are you leaving at the right time, but you understand how long the process will take.

Understand that there are going to be complications and loose ends that have to be cleared up. In an ideal world, every sale would be one-and-done, but that’s rarely the case. Be sure to allow extra time in your exit strategy should any unforeseen hurdles arise. It might not be a bad idea to accomplish the sale in stages, allowing you to guide new management into taking over.

Willingness to Leave

Associated with time is your willingness to walk away. You’re cutting the cord of a business you’ve put your heart and soul into. Are you ready to let someone else take it? For many people, running their own business is akin to having a child that you nurture and raise from infancy. Prepare yourself for this.

Again, staying involved for a time after the initial sale can help you to gradually step away and guide the new management into their role. You can show them what works, what doesn’t and why, and step away when you’re comfortable.

Economics of Exit

Money matters, and perhaps in no way more than selling your business or turning it over to a new owner or management. Are you looking to divest yourself entirely from the company, or is this just a change of balance? Are you going public or affecting a private sale? You need to value your company and understand how much it’s worth in theory and in the real world. You need to understand its bottom line as well as the economic benefits and complications that come from selling it off.

Many owners decide to maintain a minority interest in the business. If you’re taking this route, make sure that your company is still positioned for financial success in the future. Resolve any and all problems and financial obligations that you can before the deal closes.

Securing the services of a qualified business broker can help you to make all the right decisions and steps in developing your exit strategy. If you find yourself in this situation with your Memphis business, review our business brokerage services and give us a call today.

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