Exit your business


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Exit your business

  1. 1. Get Ready to exit your business
  2. 2. Face it openly It's my baby. Why would I walk away? But I don’t want to sell my company! Whenever you talk to entrepreneurs about exit strategies, they almost invariably protest
  3. 3. The only way You may never want to exit your company, but making it ready to sell will guarantee a good result.
  4. 4. Top 5 for a healthy Business • Invest in your web side • Invest in your content • Invest in marketing automation and CRM software • Create a real-time dashboard of your sales pipeline • Develop a formal sales process
  5. 5. Main Questions • Are you ready to sell your business? • Is your business ready to be sold? These are not the same questions although the answers must be consistent.
  6. 6. Are you prepared to let go of your business - to get out now? Physically Logistically Financially Emotionally Think about
  7. 7. Business Ready • Do you have a history of consistent sales and profit growth? • Do you have at least 2 years of clean financials? • Do you have a foundation of robust systems, processes and structure and are they fully documented? • Do you have projections showing increasing value for the buyer long after you exit? Do you have projections showing increasing value for the buyer long after you exit? Is you business ready to be sold
  8. 8. Really Ready • Are you ready to make the necessary changes to make the business “buyer attractive”? • Do you know what makes your business “buyer attractive”? • Do you know what makes your business successful in your market? • Are all your stakeholders prepared for the transaction?
  9. 9. Many prepare themselves for their exit and forget to prepare the business can make for a very tough transition for the business, clients, team, and suppliers. Challenges are totally avoidable - prepare the business for the exit transaction while you - prepare yourself for your exit transition Don’t forget
  10. 10. PLAN AND PREPARE – and DO IT NOW! You need quickly decide on two things: 1. How much do you want to sell for? 2. When do you want to sell? able to do what you want next in your life: new business travel around As soon as possible? But will you get the figure you are seeking?
  11. 11. To Maximize your exit strategy • Quantify your business value • Eliminate worthless inventory and debtors • Tidy up financial records
  12. 12. Best to Maximize • Audit your books • Install and improve Systems • Prepare your management team
  13. 13. Make it attractive • Inventory • Plant and equipment • Business premises sell all obsolete or slow moving stock items look at your premises with the eyes of a potential buyer. Clean up, maintain, and paint the premises where necessary. sell any redundant or obsolete plant and equipment, machinery, spare parts, and scrap that is no longer required.
  14. 14. More Attractive • Employee • Commercial premises leases Ask your staff to take their leave and other entitlements. Retaining key employees after transfer to the new owner. Review business premises leases and ensure the lease does not expire or require renegotiation during the time when you plan to sell the business.
  15. 15. Right Price? • Valuing your business • Return on investment (ROI) • Asset value-going concern ROI = Net Annual Profit x 100/price or Price = Net Annual Profit x 100/ROI
  16. 16. Right price - are you sure • Market value • Cost of creating the business from scratch • Obtaining professional advice
  17. 17. - Get more qualified buyers - Finer points - Emotions : Having a professional working will eliminate the stress and emotion Most important the sale You need to decide whether to sell your business yourself or to engage a business broker to do it for you. Put your business on the market Get a business broker involved
  18. 18. Don't Forget • Qualifying buyers • Negotiation • Finalizing the sale Get a signed Confidentiality Agreement before supplying private financial records to any potential buyer negotiation terms: what do you want? anticipate compromise: what will you compromise on? your walk away position: when will you stop negotiating and walk away? to minimize the occurrence of any problems and to ensure the sale is valid involve a professional business broker
  19. 19. What about Franchise too much pressure too little free time the desire to move on to something new
  20. 20. Before Making any rush decisions ... draw up a list of all the problems you are experiencing in the business sit down with your franchisor and go over them one by one ... speak to other franchisees
  21. 21. First Steps 1. Review franchise agreement to be sure you are allowed to sell your business & transfer the agreement to a new owner 2. Consult with the franchisor beforehand Company will likely want to approve the new owner
  22. 22. More Steps Most franchisors have a first right of refusal What to do? Consult franchisor: if it doesn’t wants to buy, get proof of this waiver in writing Be careful!
  23. 23. • read over the section in your franchise agreement on post-term covenants • make sure you know the rights and duties you have Be careful again significant role in any business plan you may have down the road recommended that you bring your business broker or lawyer in to help you
  24. 24. One Possibility Inquire whether or not there are other franchisees in the system who may want to take over your business. This could prove to be the fastest way to an exit.
  25. 25. To Exit your business BCI Business Brokers Tony Arena (Managing Director) 3/1 Alexander Street, Crows Nest, NSW, 2065 Phone: +61 2 9439 3399 Mobile: +61 411888148 Email: tarena@bc.com.au www.bc.com.au We can help you