What is the Exit Planning Process
to prepare for a sale?
Learn how to get your company ready for sale
Make sure your company
is ready for sale.
While not the only way, typically your business exit as an owner will involve a sale of the company. To successfully complete this transition away from your business, you need to make sure it is prepared for you to leave.
The two biggest challenges you will face as business owners beginning the process of getting their company ready for sale are:
Thinking you can prepare your company for sale without expert assistance
Believing it can be done in a short period of time (a few months)
Your exit plan is not simply planning to leave a company; it is actually Change Management
It requires an entire mindset shift from the top down to truly prepare your company for you to:
Successfully exit
See maximum value from your business
Do it on your own terms
Change Management Steps for a Successful Exit
1. Remove Owner Dependence
Removing owner dependence begins with changing the processes that have been established in your company.
You may be getting things done, but because you are still central to the process, separating you from the company is difficult. This does not allow your company to scale or grow and will ultimately reduce the value when the time comes to sell.
To avoid this, processes must be implemented that allow you as the owner to transition out of the day-to-day tasks of running the company. This will help remove owner dependence, which will help increase your company’s valuation when the time comes for you to exit.
2. Develop Your Leaders
If one is not already in place, we recommend adding an expert like a leadership development coach, fractional CFO, process engineering expert, etc. to guide you through creating process-oriented improvements. These improvements should have the goal of removing owner dependence and allowing senior leadership to take over the day-to-day management of the business.
Our years of expertise have shown us the consequences of your company being unable to run without you – if you exit, either involuntarily or on your own terms, then your company cannot run at all and will be unable to continue to produce revenue and profits, making it worth nothing.
Developing your leadership team to run the company in your absence will work towards removing these consequences and increasing your company’s valuation.
3. Add Annual and Quarterly Planning
The next step that needs to be taken for the owner to successfully exit is introducing and standardizing annual and quarterly planning that includes strategic and well thought out goals.
These plans should also include metrics and accountability for the company to meet these quarterly and annual goals.
This will not only help remove owner dependence, but also increase the valuation of the company, provided the processes are functioning properly. These plans show that the company is consistently meeting and hopefully exceeding goals quarterly and annually.
4. Define Roles, Processes and Performance Metrics
In addition to company-wide metrics seen in quarterly and annual planning, each role within the company should be held accountable by performance metrics.
This is accomplished by defining each role within the company, determining the process for all tasks associated with that role, and then deciding which performance metrics will be measured so the person in that role has accountability.
This will allow your company to be easily scalable since each role is not tied to a specific person. It will also increase your company’s valuation as it will be seen as a well-functioning business with defined roles that are easily measured for performance and growth.
5. Show Profitability and Scalability
Once the above systems are in place, you will be in an ideal position to scale and grow your business before it comes time for you as the owner to exit.
Implementing these systems allows you to step back and let your team manage the day-to-day running of your company. This will give you time to help work on the growth of your company before it comes time to sell instead of spending your time working in the business itself.
This is the final step to be able to see maximum value from your company in a sale. It will not only show potential buyers that your company has the potential for growth, but also that it can function and scale without you at the helm which will increase its valuation.
Who Needs to Be
Involved in Exit Planning?
Change management is simple but not easy and it involves a team of people to do it correctly.
Exit Planning
Accounting
Legal
Sales
Financial Planning
HR and 401k Planning
Life and Family Management and Planning
Estate Planning
Leadership Development
Planning to exit your company cannot be done alone.
Your entire team should be involved from start to finish to be able to accomplish the changes that need to be made within the company for you to successfully transition out.
Get Your Company Ready for Sale
If you’re ready to begin, you can start with our free Exit Diagnostic Analysis to receive a scorecard of what your business looks like today. Next, our Exit Planning team will meet with you to go over your results, which will allow us to help you create your goals and develop an exit plan to maximize your company’s value and transition out on your own terms.