There may come a time when leaving your business is the best decision to take. It may no longer be profitable, you may no longer be fit to handle it, or it has reached substantial profit — amongst many other reasons. Whatever the case, you’ll need a business exit strategy to minimize your losses and maximize personal profit as you leave the company.
Midway Business Brokerage has shared a definitive guide to help you understand the nuances of this matter. Read on and apply this knowledge to your future plans.
What’s an Exit Strategy?
The exit strategy of a business is a plan that outlines how you’ll sell your business. This will include the valuation of your company, identifying prospective buyers, negotiating sales, and transferring ownership. Done right, your exit strategy will ensure great personal profits or help you avoid any debt.
Given how complicated this strategy can be, you’ll want to consult with professionals like business brokers. They can help you begin your plan and discuss the pros and cons of various business exit strategies. These include:
- Closing the company
- Selling to employees or partners
- Selling to a third-party buyer
- Passing the company to a family member
- Mergers and acquisitions
- Management buyout
- Liquidation
- Declaring bankruptcy
Preparing Business for Exit: Steps to Take
1. Pre-Sale Clean-up
You wouldn’t buy a business that doesn’t have things in order. So make sure to perform a clean-up before putting your company on the market. You’ll need to get your books in order and ensure that every record is up to date. Check your leases, contracts, financial statements, and other reports and documents and ensure that everything remains in compliance with existing regulations.
2. Business Valuation
To put a price on your company, you’ll want to know its current value in the first place. That’s why it’s important to exercise due diligence and get your business appraised. Your company’s financial worth will be determined based on its potential for growth, financial history, and current market conditions. Once you know the value, it’s much easier to set the expectations of buyers.
3. Selling Method
One last step you’ll need to consider in your business exit strategy is how and when you’re going to sell your business. You’ll need to pick one of the options above by their merit, especially in how they’re going to bring in the most profits. There’s also the matter of who you’re going to sell your business to. To get a clearer understanding of potential buyers, work with experienced business brokers.
Work With Midway Business Brokerage
Creating an exit strategy for your business helps you get the most out of it if you leave in the future. Use this guide to create a basic yet comprehensive plan. If you need help designing one or selling your business, work with Midway Business Brokerage. We are your trusted New Jersey business brokers offering complete and quality services. Contact us to get started!
