Exit Strategies

Delay in Succession Planning Can Be Costly

For any business, or practice, a plan for ultimate sale should be created earlier rather than later

DALLAS, Feb. 2, 2018 /PRNewswire/ — Recently, media in New England reported the “retirement sale” for a company that had been in business for 235 years. Sadly, the firm’s owners were closing the business because they could not find someone to buy the company.

“Timing is a key component in the ability to sell a business for maximum value,” said Terry Johnson, Chief Revenue and Strategy Officer at Generational Equity, a leading mergers and acquisitions advisor for privately held, middle-market businesses. “A business forced into closing its doors may have had much greater value if it had been positioned for sale by a professional at the right time. Timing is everything, and I’ve never met a business owner that regretted starting the process too early.”

Johnson added, “Too many people wait to begin the exit planning process until they are forced due to failing health, industry upheaval, and a myriad of other unforeseen circumstances. The degree of difficulty increases exponentially in these situations, and the net result is often times not favorable.”

What makes an optimal time to sell?

  • A strong economy
  • Low interest rates
  • Favorable tax environment
  • A strong stock market
  • Active buyers with ample capital to invest
  • Industry consolidation
  • A business with a substantial opportunity to grow with the help of additional capital or experienced management

Buyer-Ready?

“A business must be buyer ready in order to take advantage of positive timing conditions,” noted Johnson. “This means following the multi-step process Generational Equity directs for all of our clients.”

Timing is a key component in the ability to sell a business for maximum value

One key step is creating professional documentation that demonstrates the buyer-readiness of the company. Because of this, having an experienced M&A advisor by your side is vital.

“A proper exit plan is not something that is done overnight,” said Johnson. “A business owner should initiate the process far in advance of their target exit date. For millions of baby boomer business owners now reaching retirement age, selling at the right time may be the difference between long-term financial struggles vs. a comfortable retirement. The stakes are high, and my advice to business owners is to start the process early.”

 

 

About Generational Equity
Generational Equity, DealForce, and Generational Capital Markets, member FINRA/SIPC, are part of the Generational Group, which is headquartered in Dallas and is one of the leading M&A advisory firms in North America. With over 250 professionals located throughout North America, the companies help business owners release the wealth of their business by providing merger, acquisition and strategic growth advisory services. Their four-step approach features exit planning education, business valuation, value enhancement strategies, and M&A transactional services.