There is a lot going on out there but designing your exit strategy is more important than ever.
“Should I sell my business now?” We have always gotten this question, even more frequently since Covid-19 started. Like with the stock market, business owners too often ride the wave up and assume it will keep rising until they reach the exact moment – and value – that they want. That isn’t going to happen for the vast majority.
Of course, the answer at any given moment depends on so many factors:
- YOUR personal situation
- YOUR family considerations
- The overall economy
- The health of your industry
- Perhaps most importantly, the sellability and value of your business
Should I sell? Should I wait? Till When? At what price? The answers are different for every one of you reading this article. What is the same for every business, however, is the series of questions and considerations to design an exit plan.
If the value of your business was down during Covid, but still reasonable for your needs, consider selling. Get over the emotion of it being worth more at the beginning of 2020 and don’t gamble on the future. If you cannot jump out at the current value, get hyper-focused now on a comprehensive, realistic exit strategy. Call if we can help you think through your specific situation.
Whatever your situation, these 5 Action Items Apply:
- Get absolute clarity from your CPA / tax advisor loan uses / forgiveness stemming from loans you have gotten throughout Covid. Do what you need to do to have your financial statements in order shortly after December 31st.
- Request an estimate of value based. This is not an exact science (it never is) but an estimate will give you a baseline for decision-making. Get this done now, you can quickly update it each year.
- With items #1 and #2 as a foundation, set out a preliminary goal (target date and value) for the sale of your business.
- Design a plan to get from today’s value to your target value by your exit date. Your exit strategy should consider: What is working, what needs work, how to get creative…in these 8 areas:
- Reduce your company’s dependence on you
- Brand and your marketing engine
- Quality of revenue
- Scalability: capacity, process, training, infrastructure
- Human Capital and Leadership
- Financial Management: profitability, accounting, cash flow
- Risk Management
- Make sure that all your advisors are communicating and coordinating as a team on your behalf! If anyone is not doing so, kick them to the curb!
Give us a call to discuss these issues based on YOUR situation!
David Shavzin, M&A Advisor
Business Sales, Value Creation, Exit Strategy, Succession Planning
Founder and President, The Value Track, Atlanta, Georgia
Co-Founder and President, Exit Planning Exchange Atlanta
770-329-5224 // [email protected] // LinkedIn