When Is the Best Time to Plant a Tree? Or Prepare an Exit Strategy?
According to an old Chinese proverb, “The best time to plant a tree is twenty years ago. The second-best time is today!” So, in that vein, the best time to begin planning to exit your business is when you started the business. If that didn’t happen, then the next best time to begin planning for an exit is today! In the words of the very wise Benjamin Franklin, “Failing to plan is planning to fail.”
Anyway, here are some questions you may want to ask yourself when developing an exit plan:
- What is my goal/plan for my business? Leave to an offspring/family member? Sell to employees? Go public? Sell to a third party?
- What is my time frame? For a potential exit in 5-10 years? Sooner? If you are considering a third-party sale, your 65th birthday may not be the optimal time to sell your business (timing is important).
- What am I going to do after an exit? Today’s active “baby boomers” are often thinking of another endeavor after they exit their business. Travel? Volunteer? Move closer to family? Start another business? Spend more time with old or new hobbies?
- How much money will I need to live on? How much do I need/want to net from “the exit ? ” Are you working with a financial planner?
- Are my financial statements and taxes in good order (a prerequisite for a third-party sale)?
- Are my businesses systems and procedures well documented (if you haven’t read the E-Myth, you should)?
- What is the value of my business? Should I get a business valuation (short answer is YES!)
- Do you have partners in the business? Do you have a buy/sell agreement? (You should & must!)
In the process of preparing an exit or succession strategy, you should have a team of trusted advisors to help and advise you at various stages of the project.
That team should include:
- a business attorney or firm
- a CPA &/or a tax specialist
- a financial planner
- a business intermediary
- a family business consultant if you are considering a transfer to a family member, consult
These are just a few of concerns that should be addressed or at least considered as part of the exit planning process. So, if you haven’t already begun the exit planning process, just remember, the second-best time to do so is today.
Business Buyers and Their Financial Information
May 23, 2017
Every day I have people contacting me about one or more of our business listings. Due to confidentiality issues, I am not at liberty to immediately discuss the business, other than providing general information and some interesting qualities about the business(es). In essence, whatever information the inquirer sees in one of our ads is what I would be reiterating… that is until I send and the person returns three documents. These documents, buyer documents, as we call them, consist of a confidentiality form (don’t tell anyone anything that you learn about the business), an agency disclosure form (we represent the sellers), and a buyer profile (a little about the buyer and his/her interests, experience, and finances).
Planning for the Next Chapter
May 19, 2017
by Olga Kennedy
Most of us make plans: dinner plans, movie night plans, college plans, business plans, wedding plans, retirement plans. Those who plan ahead often make plans well ahead of their passing. They take out disability insurance policies and make sure their affairs are in order so that their loved ones will be taken care of.
What does this have to do with owning a business?
Planning for the end—or rather an exit—has everything to do with owning a business. Many business owners begin and grow their businesses with a plan. But when it comes time to leave, they have no exit strategy for that. Business owners who are looking toward retirement may find themselves unprepared to pass the reins to their children or to a new business buyer. These owners have spent their time working in their businesses as owner operators, growing revenue, improving their numbers, and building their businesses, but they haven’t created an exit plan.
Business owners must have an exit strategy. There must be an end in sight, a road map toward the next chapter.
Whether the business owner transfer the company to his or her children or whether s/he decides to sell the business, his/her affairs must be in order. Some things a new business owner will want to see include:
- Accurate financial records and tax returns
- Products and services offered
- Customer database
- The business’ strengths and weaknesses
- Opportunities and plans for growth
- Equipment lists
- Inventory lists
- Documented standard operating procedures
- Employee records and an organizational chart
- Marketing and business plan
All these things help determine what the business is worth, how much the asking price could be and ultimately how much the selling price turns out to be.
People will turn to experts when they need advice or help: accountants, attorneys, bankers, insurance agents. When it comes to selling a business, it’s worth the time to find the right person to help. Engaging in a conversation with a professional business broker could help prepare the business for sale.
The role of a business broker is to help people sell their businesses. S/he helps create and execute exit strategies for business owners. So as business owners plan the days, weeks, months or years ahead, it’s a good idea to add an exit plan to the agenda. It’ll make the road to retirement a bit easier. It’s never too early to plan—or to dream!
Don Emmett Receives Certified Business Intermediary Designation
Atlanta, Georgia – December 11, 2014 – The International Business Brokers Association (IBBA) announces it has conferred Don Emmett of Raleigh NC its prestigious designation of Certified Business Intermediary (CBI).
The IBBA is the world’s largest international organization of experienced, dedicated business brokerage intermediaries representing the middle market. The CBI designation is awarded to intermediaries who have proven professional excellence through verified transaction experience, education and peer review. Emmett’s designation demonstrates exemplary commitment and experience as a professional business intermediary.
Since 1983, the IBBA has addressed professional issues of business brokerage specialists. The organization has over 1,000 cooperating intermediaries active in middle-market transactions across the world. It provides education, networking, conferences, member tools, peer-to-peer roundtables, private equity expos and other support, all specific to business brokerage specialists.
Emmett is the Managing Director of Entrust Associates and has devoted his professional career to assisting buyers and sellers of businesses.
Additional information is available from Don Emmett by telephoning 919.881.9997. He is available to the news media as a source of information or comments regarding acquisitions, sales and mergers of closely held businesses and the market for them.
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About Entrust Associates
Entrust Associates is a Raleigh-based business brokerage firm that specializes in representing business sellers in the Raleigh metro area by offering confidential assistance, in valuing and strategically selling small- and medium- sized businesses. Entrust business brokers are professionals with advanced accounting or legal degrees, along with entrepreneurial experience. Their background enables Entrust to provide unequaled service to the business community.
About IBBA: Formed in 1983, the International Business Brokers Association® is the largest international non-profit association operating exclusively for the benefit of people and firms engaged in the various aspects of a business brokerage and mergers and acquisitions. Today, the IBBA has more than 1,300 cooperative business brokers and intermediaries across North America, Asia, Europe and Australia. For more information, visit www.ibba.org.
Name, Title Olga Kennedy, Director, Business Transactions