Should you be planning on a business exit or liquidity event for your business, back up a little and consider all your options, BEFORE making any major decisions. This post should start you thinking about the many options open to you in a business exit.
Do any of these strike a chord?
- An acquisition opportunity is on the radar
- A strategic joint venture
- An unexpected approach from a trade buyer
- Realisation that its time to exit your business
- Intergenerational transfer
The irony of course is the bigger the challenge and the greater its consequences, it’s often the quicker the fix that is applied – which will inevitably come out of your pocket.
It never ceases to amaze just how little “thinking” time is put into these situations. Some clients spend more time on planning their annual holidays than they do planning their business exit, where up to 70% of their private wealth can be tied up!
A fast move in complex business situations inevitably ends in money being left on the table. Yours! The trick is to break the habit of a lifetime and recognise the complex from simple situations.
Complex business situations such as the 5 listed above, all require
- Methodical problem solving – a process
- Content – the facts
- Right people at the table – potentially with skill sets beyond yours
- Time set aside for thinking things through and incubating your thoughts
…. If you want the best solutions.
Take for example a recent trade sale. The owners thought they had struck pay dirt when a global buyer knocked on the door, chequebook in hand. Before others even had a chance to discuss it, the deal was done over dinner – all mapped out on the back of a napkin.
This situation is common and in my experience, inevitably money will be left on the table depending on who has the stronger M&A experience and who is the best negotiator – in this case the acquiring company. Furthermore by rushing into a commitment too early the owners missed exploring options that would have assured them an even greater retirement.
And retirement these days is expensive!
Options for you to consider for instance in a trade sale situation as above:
- Consider other exit options beyond just a trade sale: viz. management buyout, refinancing, private equity, employee share ownership or intergenerational transfer.
- Foster a healthy competitive bid situation – this may peeve some buyers (surprise, surprise!)
- Compute all valuation methodologies – beyond the rudimentary times earnings
- Implement operational improvements to increase valuation
- Showcase your overall business performance (not just financials)
- Tax & estate strategies
- Where a sizeable deal, ensure you select the best advisory team (your Accountant or Solicitor may be out of their depth on this deal)
About the author: I am not necessarily an expert in any one particular subject matter, but what I am particularly good at is helping business owners and teams work through complex challenges & deals and arriving at the best solutions. I have developed a process that gets great solutions & importantly brings all relevant others along for the ride.
If you would like some help: Call Jeremy de Constantin for a pre-consult workshop (2 hours) with me on or off-site on +61 402 242 670 or jdc – at – deconstantin.com.au.