ACTION Plan & Exit Strategy

When it’s Time to Exit 

Selling a business is tough. Even profitable, well-run companies must overcome obstacles on the way to a win-win deal. Examples of obstacles include:

• Profits drive the price so if you don’t have high profits you better have something else to create value. This includes proprietary products, proprietary technology, or an unexploited niche.
• While buyers want a well-run, profitable company they also want potential. If you present your company as running at maximum efficiency you will scare away those buyers who fear any change will cause profits to decrease (and they’ve paid based on the high profits).
• A buyer’s skills and interests must match the attributes needed to run the business. The business cannot be extremely dependent on the owner (no management structure).

Maximize Price and Streamline the Process

Presenting your business is a key. Follow this format to increase your success. Over the years I’ve talked to over a thousand business owners and looked at selling packages from hundreds. Most assume either the buyers are complete fools or the sellers are so naïve they think a couple of years of financial statements and their verbal representations will make an easy sale.

To maximize price and streamline the selling process a business seller should follow my ACTIONplan. Follow this plan and you will set yourself apart from other sellers. ACTION stands for:

• Arrange all the affairs of the company
• Coach and counsel the company. Its people, processes, and systems
• Transmit and teach all the good “things” about your firm
• Intricacies that make your company special
• Operations and management systems in place that will make a transition smooth
• Numbers, all the financials in understandable form, straightforward with no “tricks”

Presenting Your Company

For now, let’s cover transmitting, which means presenting the company. A buyer must see the company for what it is. Nothing more, nothing less. Present the potential, but have supporting research. Potential is the word most overused by business sellers.

Next, the basics of presenting your company to a buyer. First, cover the obvious things like sales, profits, product or service, industry, etc. Emphasize the little things that most sellers forget about. Often these are the non-financial factors, customers, employees, the lease, supplier relationships, marketing, and competition. Go into detail, without giving away any trade secrets. Astute buyers will notice this. Remember when buyers have to dig for information, they always wonder why the information was so hard to get and what else could be hiding.