Exit Planning

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Exit Planning

  1. 1. Exit Planning Increasing the Value of Your Business
  2. 2. Exit Planning <ul><li>Many companies fit into one of the following categories and would benefit from an Exit Plan: </li></ul><ul><ul><li>The value of the company is less than the price needed to exit </li></ul></ul><ul><ul><li>The company structure or operation is highly complex </li></ul></ul><ul><ul><li>The books and records are in poor – or non-existent – condition. </li></ul></ul>
  3. 3. Exit Planning <ul><li>Look at your company as a puzzle with many different pieces. You need to evaluate all the various possibilities and opportunities. </li></ul><ul><li>The key to value is to uncover, fully document and support any unrealized strengths and sell the business at an increased value. </li></ul><ul><li>It is necessary to clean up your books and records, and/or untangle any complexities prior to placing your business on the market. </li></ul>
  4. 4. Exit Planning <ul><li>An Exit Plan includes: </li></ul><ul><ul><li>Business Analysis and Review of products, services, niches, customers, facilities, equipment, market, competition and growth opportunities </li></ul></ul><ul><ul><li>Financial Analysis and Review – recasts, proformas, appraisals, real estate considerations, debt considerations. </li></ul></ul><ul><ul><li>Organizational Review of company structure, employees, environmental issues, contracts and legal issues. </li></ul></ul><ul><ul><li>Various Exit Strategies - Acquisition by Public Company, Synergy Acquisition, Private Sale to High Net Worth Individual, Sale to Private Equity Group, Reverse Merger, MBO/LBO, ESOP, and Liquidation. </li></ul></ul><ul><ul><li>Exit Plan Issues – Earn Out, Non-Compete, and Consulting issues. Make necessary introductions to accountants to acquire knowledge of tax consequences for potential exits, to determine most beneficial plan regarding taxes and tax liabilities. </li></ul></ul><ul><ul><li>Issues regarding family, taxes. </li></ul></ul>
  5. 5. Exit Planning <ul><li>Summary – Determine price range, detail the most appropriate Exit Strategy. Identify and eliminate, if possible, deal killing issues, threats and risks. </li></ul><ul><li>Example: A business that had been determined to have a maximum expected sale price of $1.2M. Upon compiling an Exit Plan, several factors were discovered which resulted in numerous areas to increase the value. The adjustments were implemented and a year later the owner sold the business for $1.8m. </li></ul>

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