Posts tagged with: exit strategy
This Way Out Group LLC announces the release of HARVEST YOUR WEALTH – Exit Essentials for Your Business by exit strategist, author, speaker, and radio host, Kerri Salls to help business owners cash out of their business so they can cash in on their future.
FRAMINGHAM, MA (January 21, 2013) – This Way Out Group (http://thiswayoutgroup.com), the break-out boutique services firm providing comprehensive collaborative exit planning services announced today the release of HARVEST YOUR WEALTH – Exit Essentials for Your Business (This Way Out Press $17.97 on Amazon) by CEO and author, Kerri Salls. HARVEST YOUR WEALTH – Exit Essentials for Your Business educates and prepares business owners to monetize their business on their terms when they plan to get out, instead of simply shuttering the business and walking away. Only when an owner prepares the business for a clean, solid, and profitable exit can they expect to cash out of the business to cash in on their future. Written by expert exit strategist Kerri Salls, HARVEST YOUR WEALTH reveals the secrets the transaction experts want entrepreneurs to know before selling a business, but no one has been telling them until now.
In HARVEST YOUR WEALTH, Salls introduces the 95% of all entrepreneurs and owners who do not have an exit plan for their business to the decisions, choices, options and opportunities they need to know about years before they decide to get out of their business. She advocates for early exits, especially over the next five years for baby boomers.
Salls says, “HARVEST YOUR WEALTH gives the owner/entrepreneur more control and leverage getting out. Plenty has been written on starting and growing a company. Very little has been written on exits, on monetizing that investment to be able to get out. What has been written has focused on the financial and legal side of the exit transaction or from the advisor or the buyer’s perspective.”
Less than 10% of business owners who put their companies up for sale actually get the deal done. (2010 Survey of Brokers and Buyers by MidMarket Capital) “[Exiting small business] owners are preparing for the deal of a lifetime with possibly zero experience.” (MorganStanley SmithBarney publication, 2011) [via Blackbridge Newsletter 2011]
They think they’ll be able to sell when they want for what they want with no lead-time or preparation of the business, the team or the business owner. That’s a diet of hope and promises that will satisfy no one. Because of a lack of pre-planning, 95% of all business owners are leaving up to 50% of the value of their business on the table when they exit.
In this book, Salls focuses on the needs of owners to make their business buyer ready and buyer attractive; on exit planning from the seller’s perspective before the transaction experts, or the buyers come into the picture. The urgency for baby boomers to act now cannot be overstated.
HARVEST YOUR WEALTH provides steps, checklists, assessments, questions and exercises all business owners must consider in order to take control and achieve their goals in the business and beyond. Salls provides the resources, tools and insight to encourage entrepreneurs and business owners to, as she says, “Plan their exit from the outset.”
Salls started her career in the Peace Corps in West Africa and then spent a decade accumulating multi-million dollar corporate achievements before launching her first business in 1988. She has been active in business strategy and exit planning for 40 years.
This Way Out Group LLC [http://thiswayoutgroup.com] has been refining and applying a holistic system to assist business owners since 1999 specifically to help owners transform an income generating business into a wealth-producing machine so they can sell or scale the business on their terms on their timeline. Partnering with the business owner 2-5 years before their expected exit, we help established and hyper-growth companies prepare for and achieve their optimum exit strategy. We help owners to accelerate sales, optimize growth, and maximize value to make their business buyer ready and buyer attractive so they can get out and move on to the next venture, adventure or avocation.
HARVEST YOUR WEALTH – Exit Essentials for Your Business is available at Amazon and other outlets or at www.harvest-your-wealth.com.
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It’s good advice to appoint key advisors in the sale process as soon as possible to reduce costs and get ahead of the sale. However, it is also imperative for you, the business owner, to do your part long before you bring transaction experts to the table.
Develop and discuss with all your advisors, a recap of what business you are in and your reasons for selling. It is your business and you know it better than anyone else. It’s up to you to communicate your goals for the business, your team and your objectives getting out.
a. Initiate due diligence proactively. It shows potential buyers you’re serious and committed to the sale. It also will identify area, concerns, risks that can reduce your potential sale price. For example, unpaid taxes, incomplete financials, employee contract terms.
b. Define your ultimate exit strategy, which can also uncover potential opportunities to increase or decrease the value of undocumented and unregistered intellectual property.
The bottom line is that your business needs to be prepared for the sale or other exit options at all times, which involves organizing all aspects of the business to be appealing to a buyer.
You must put yourself in your potential buyer’s shoes to take a critical look at your own business. If not, you risk not achieving your best outcome, leaving money on the table.
Taking time to understand the drivers inherent in a potential buyer’s business can help you position your business to be buyer attractive and achieve a better sale outcome.
Whether you currently surround yourself with a strong team of advisors or not, when you start planning your exit, they are essential to every goal you want to achieve in this exit transaction.
Meet The Team Members You Need to Achieve Your Exit to Reinvention
Most business owners are not prepared to exit their own business. More than likely, that includes you. It’s not your fault. No one taught you. No one showed you how to prepare for your exit. In fact, no one is really talking about any other parameter of your business except income.
Are you in business to produce income to pay yourself, or enough to cover payroll? Or are you in business to make a profit? If you intend your business to make a profit, that means you expect to monetize the business at some point to produce the wealth you need for your reinvention.
When you decide you are ready and committed to an exit strategy, only then can your exit transaction team go to work on your behalf.
You’re familiar with the phrase “It takes a village to raise a child”. The analogy fits your exit planning well. It takes a team to exit your business successfully.
Here’s a brief list of the legal experts you must consider for your exit team and their possible contributions. We’ll continue the list of expert advisors tomorrow.
Until now, most likely, one attorney was enough. For your exit, you want to raise the bar and engage very precise experts.
IP Attorney – You want an intellectual property attorney to help you identify, document and protect the unique ideas, processes, products and services you provide. Your IP attorney is a powerful expert resource to help you recognize and protect the real value in your business in the form of copyrights, trademarks, patents and other forms.
Business Attorney – Your business attorney is an expert on business and commercial transactions. This person or team understands corporate contracts, hiring practices, and negotiations as well U.S. and state specific commercial law.
Governance Attorney – Your corporate governance is a system of structuring, operating and controlling the company with a view to achieve long-term strategic goals that satisfy all stakeholders, and comply with all legal and regulatory requirements. To be buyer ready, you need a legal team to review, update or correct and document your corporate governance practices, processes, customs, policies, laws and institutions including the relationships among stakeholders such as shareholders, board of directors, employees, customers, creditors, suppliers and the community. According to Gabrielle O’Donovan, in A Board Culture of Corporate Governance, says: “the perceived quality of a company’s corporate governance can influence its share price as well as the cost of raising capital.” Your corporate governance is a system of structuring, operating and controlling the company with a view to achieve long-term strategic goals that satisfy all stakeholders, and comply with all legal and regulatory requirements.
Personal Attorney – You must bring your own personal attorney into the exit transaction to protect your own interests. You are this attorney’s client. YOU hire this attorney to watch out for your best interests through the exit process. The business hired the business attorney to protect the business’ interests, not yours. He/she cannot adequately serve in both roles.
Estate Attorney – You need your estate attorney to be an integral player in the discussions of your exit options to voice the legal impact on your estate of each choice and protect your long-term best interests.
Preparing a written transition plan is a critical element of your whole exit strategy. But surveys consistently verify that CEOs avoid this element regardless of age, or size of the business. There’s a concerted dearth of attention to how they will transition out of the business by CEOs, never mind determining to what they are transitioning.
- Fail to get the highest possible value for their business, or
- Transfer it to an ill-prepared successor, or
- End up paying too much in taxes
or even all of the above.
Whatever your goals or your timeline, it is time to plan for your exit now. Experts agree that if you want to maximize the value from all your sweat equity, you must invest in proper planning years in advance of your intended exit.
The ROCG Report results confirm:
- There is an overall lack of planning. Their survey found that only 9% of business owners have a formal written plan that includes succession and transition planning for the business. That means 91% of all CEOs in the US have no plan on how they will transition out of day to day operations.
- Current estimates report that more than 40% of business owners plan to exit within the next five years; and 80% of all business owners plan to exit within the next 10 years.
- But on a timeline of market trends, there will be many more sellers than buyers in the market place from 2013 – 2018, just when that first 40% are expecting to sell their business.
It is a disaster waiting to happen. It will only be compounded when you add in the fact that 21 million baby boomers will be selling off their businesses over the next 15 years.
Will widespread catastrophic losses be the result?
Without proper advance planning, we could see wave after wave of business owners fail to get out with the wealth they need for their reinvention. These CEOs:
- May not be in position to maximize their personal finances for financial independence when they sell sale;
- May be forced to sell at a deep discount or accept unfavorable conditions;
- May risk a business closure, leaving them with nothing;
- May have a business that ultimately fails and/or potentially destroys family harmony in the transfer to family members.
Timely transition planning is a core strategy to avoid facing these types of obstacles and despair. Pro-active strategic business planning and transition planning can help to ensure that the transition is successful at meeting all your goals for the business as well as your lifestyle and legacy objectives.
Everyone starts their business confident in what they set out to do, with a dream of what the business will provide for them. We all get very busy working in the business and it’s natural to not worry about the future never mind when and how you will exit the business.
But if you are serious about profitably exiting from the business at some point in the future, here are 5 steps to ensure you achieve your goal to fulfill the promise of what your business would deliver for you and your family.
- Identify your exit strategy goal. –
Do you want to build the business to a certain level and sell it?
Do you want to pull a certain income out of the business until you die?
Do you want to pass the business on to your successor or a family member, or some other specified designee?
- What does the business have to do/provide/deliver – to allow you to achieve that goal? –
It varies depending on what you want. Even if what you want is a moving target, document it anyway. You don’t know but that an exit opportunity out of left-field could help you achieve your goal easier, better or quicker than what you planned for. Keep your exit strategy front of mind.
- What are the steps and milestones for that goal?–
With the first 2 pieces in place, now you can start breaking down the steps it will take, and all the pieces you have to pull together. Some pieces like clean financial records and documenting all procedures can take years – well before you are in a position to act on your exit strategy. In this case, your goal achievement hinges on staying focused on the tasks that lead to realizing your ideal exit strategy.
- Which exit strategy option appeals to you and which one will best fit your goal?
Based on your goal of when to exit, how to exit, and what happens to the business when you do exit, etc.; the most effective exit strategies become obvious to achieve your goal. Others clearly don’t fit your needs or goals; and maybe others, you have no interest in pursuing. Only with a clear plan by intention starting now, can you ensure you’ll achieve your exit strategy goal.
- What steps can you take every quarter and every year to set up your business for that exit strategy?
Now we get to implementation. For exit strategy goal achievement, the longer the timeframe you have to implement the business foundation pieces, the more cohesive they will be and the more functional they will be independent of you. This is one more way to maximize the value of the business in the marketplace, making it a more attractive opportunity for buyers. Especially if part of your goal, by design, is to command the best price, then goal achievement requires working on your exit strategy every quarter of every year.
Apply these 5 steps to design your exit strategy by intention rather than by default if a profitable exit will be one of your goal achievements. It’s what you must do to optimize your business and help your broker, consultant, lawyers and other exit professionals to help you achieve your goal of your ideal exit strategy. Anything less and your exit will be by default, at minimum value, at the greatest cost to you, with the fewest choices and less leverage to achieve your goals.
When you get ready to sell your business, the value of the business must be in the business to be monetized and for a buyer to see the value without your active involvement.
Before you can sell the business for maximum value, you must transfer all your knowledge and wisdom into your team, systems, procedures to carry on prosperously in your absence.
For each challenge listed below, here’s what you need to do:
The whole business is in your head – only in your head
You must share every idea, policy, system, process, key, password, contract, etc with your management team. You may give specific tasks and responsibilities to specific people or you can appoint a successor to take on your operational role
Don’t know how to plan, when to plan, when to find time to plan.
You must delegate day to day operations and make time to plan strategically. Get training, hire an advisor, or hire a temporary COO to get plans in place
No marketing plan, sales plan, financial plan or operating plans – except in your head
Get all these plans out of your head an on paper and assigned to different people to implement and achieve the goals in each area. Delegate responsibility for each area of your business to someone, not you. Make them operationally responsible, not you.
Don’t know how to automate or outsource
Exit planning is a great incentive to learn to automate and outsource to get more done, cheaper, not by you. Start by automating just one task. Start outsourcing by hiring an individual or a company to take over just one task or project on your To-Do list.
Decide no new tasks will get added to you To-Do list – instead you will always seek to delegate, automate or outsource first.
No operating procedures
Create an Operations Manual. Buyers expect to be able to read your operations manual, instead of calling you for each procedure. Every time you do something that is a process or procedure, write it down. Every time you document or record how you do something, you are adding value to the business. Start by simply taking notes on an index card for each task, process, system, tool you use.
No contingency plans
A contingency plan is like a security blanket for your business. It protects you, your business, your team and your customers. It also demonstrates to your buyer how valuable your business is that you are willing to protect everything that can be considered unique systems, models or intellectual property. You must lay out your emergency plans for fire, flood, other natural disasters, loss of power, computer crash, password security, data security and redundancy, safety and OSHA policies, backup procedures for when each person is on vacation or ill, etc.
No exit strategy in place
You must choose to take action to explore and consider exit options that would suit you. Take responsibility for ensuring the longevity of your company, the legacy you can leave, and providing ongoing employment security for your team. By following an exit plan you will be in control of when you exit, on what terms and the valuation you will receive to fund your reinvention
Keep all expertise in the owners/ executives heads and private files
You must start sharing your knowledge and wisdom in the business and about the business. You will maximize the value you will receive at exit, only if you transfer all of your knowledge and wisdom about the business to your team.
Everything on this list is a challenge all owners face to some degree. You can share your knowledge, understanding, wisdom and guidance willingly with your team and make your business an attractive buy at a premium price. Or you can horde all your knowledge, resist potential buyers’ due diligence efforts to understand the value in your business, and struggle to sell the business for a fair return.
The good news is that we can all learn new mindset/attitudes and beliefs, we can all learn new skill sets, and we can all learn new information combined with experience to produce the knowledge we need.
If I were to ask you, as the CEO/owner of a thriving enterprise, ‘Are you expendable?’, what would your answer be? The automatic knee-jerk reaction is ‘Of course not. I’m the CEO. I’m indispensible to the organization.’
But, in fact, in business, that’s the wrong answer! Indeed, you, wearing your CEO hat, want to become expendable. You want to be planning for your exit from the outset, from the very beginning.
To achieve your goal of being an ultra-successful entrepreneur, becoming expendable must be part of your exit strategy.
Your big payday, when you get to cash out on your business, is when you exit (e.g., when someone else buys your business). If you are still indispensible to running the business; if all the intellectual property, goodwill and value of the business is tied up in you; the business is not buyer ready. If the business is not buyer ready, your big payday is still just a hope and a dream.
Once you decide to exit the business, one of your primary tasks is to transition day-to-day operations and transfer that responsibility to your team. To increase the value in the business, to ensure that value can be monetized you, as a successful entrepreneur, must make yourself replaceable therefore expendable.
Failure to shift responsibilities and remove yourself from any operational role is a big mistake that exiting CEOs struggle with. It’s emotional, it’s strategic, and it’s tactical.
Just as you didn’t build the company or grow the company overnight, you can’t disengage from daily operations overnight. You can’t go from being indispensible working long hours, to being expendable overnight. These pieces of your exit strategy take time. They take time to plan and implement – likely years before you exit successfully.
To see if you are ready to develop your exit strategy and/or help you plan your exit on your terms, on your timeline, request a free assessment here.
UR Business Network Radio Welcomes Exit Strategy Program
UR Business Network announced today that Exit Strategist Kerri Salls is joining URBN to host a pro-active program on exit strategies for business owners who are planning how to get out of their business on their terms, on their timeline.
Show Host Kerri Salls www.urbusinessnetwork.com
PRLog (Press Release) – Sep 06, 2012 –
This Way Out™ Group LLC, the break-out boutique services firm providing comprehensive business exit planning services is pleased to announce today that CEO Kerri Salls, Expert Exit Strategist, has joined UR Business Network as the host of the new program,Exit Strategies with Kerri Salls.
Exit Strategies with Kerri Salls will provide interviews and discussion with expert advisors who can become part of a business owner’s exit team. In addition, business owners with the experience and hindsight of their own exit, will be invited to share their experience and insights with the audience.
“[Exiting small business] owners are preparing for the deal of a lifetime with possibly zero experience.”
They think they’ll be able to sell when they want for what they want with no lead-time or preparation of the business, the team or the business owner. That’s a diet of hope and promises that will satisfy no one. Because of a lack of pre-planning, 95% of all business owners are leaving up to 50% of the value of their business on the table when they exit. Salls explains that “This situation is totally preventable.”
The programming content for Exit Strategies with Kerri Salls [http://www.kerrisalls.com] will be a resource for business owners aspiring to sell, scale or pass on their business to a successor.
The UR Business Network (URBN/) [http://www.urbusinessnetwork.com] is a multimedia platform integrating online radio, terrestrial radio, print, video, web, social media, mobile devices and live events. URBN is a new 24/7 business network which will launch September 22, 2012. In addition to its global reach via the internet and other media, URBN will also be syndicating blocks of programming on terrestrial radio initially in the Boston and Providence Markets.
The UR Business Network utilizes the platform, website and social media penetration of UNregular Radio. 80% of their market is composed of listeners in the New England/ New York area. UNregular Radio enables URBN to reach a large market very quickly with their established rankings of being in the top 50,000 websites in the US and 700,000 worldwide with over eight million hits per month.
In addition to the Exit Strategies with Kerri Salls program serving business owners who want to get out, to be hosted by Kerri Salls, the current schedule of programs to air on UR Business Network include MYOB the radio show for entrepreneurs by entrepreneurs, Stu Taylor on Business, a nationally syndicated show in over 100 markets, as well as a variety of shows focused on specific vertical markets.
URBN is an aggregator of the latest technologies and most innovative modes of communication to capture, share, store and transfer data to maximize profits for the investor, the company, and the end user.
Kerri Salls, CEO of This Way Out Group LLC, and author of Exit Essentials – How to Get Out is an award winning exit strategist, goal achievement authority, acclaimed speaker, and mentor who prepares business owners and entrepreneurs to achieve their optimum exit strategy. She helps owners establish a strong foundation to catapult their business into accelerated growth, and maximize value to deliver an exit strategy that creates wealth. Salls says “It’s never too early or too late to plan how to get out. Most business owners leave it until too late because no one gave them a better option.” She provides the resources, tools and insight to ensure entrepreneurs and business owners can, as she says, “Plan their exit from the outset”.
This Way Out™ [http://kerrisalls.com] has been refining and applying a holistic system to assist business owners since 1999 specifically to transform an income generating business into a wealth-producing machine so they can sell or scale the business on their terms on their timeline. Partnering with the business owner 2-5 years before their expected exit, This Way Out helps established and hyper-growth companies prepare for and achieve their optimum exit strategy; and helps owners to accelerate growth, maximize value and make their business both buyer ready and buyer attractive so they can get out and move on to the next venture, adventure or avocation.
Ideally, your exit strategy should be part of your business plan from the outset, not just for businesses with outside funding. Every business needs an exit plan, even if you never got outside funding. If it wasn’t part of your business plan or your strategic plan, add it to your agenda for your next annual planning retreat to ensure that starting this year, you will lay out your exit strategy tied to your operational goals.
Here are four steps to ensure your successful exit strategy:
1. Take a holistic approach to planning your exit. That requires systematizing your whole business: not just finances, and cleaning up the books; but also:
• extracting value for you and your family
• maximizing value before you exit or sell
• the structure – what’s easiest to sell, or what can be monetized most easily
• systems ,strategies, process – get them out of your head
• team impact – organizational dynamics, contracts, continuity
• client/sales impact.
2. Consider and evaluate all the possible exit scenarios that might work for you and your business, e.g., sell a practice or sell your list; buyout by employees or partners, be acquired, appoint a successor or family member to continue the business, IPO. With each option, explore all the variations that might suit you.
Remember, your choices are greater the sooner you start planning your exit and the clearer you are on the goal you want to achieve and when.
3. Include your exit strategy in your annual goal setting. Align your short-list of chosen exit strategies with every goal they set so that each goal achievement moves you closer to your exit every year.
4. Make your exit strategy one of the criteria of every decision you make, every goal you set, so every goal you achieve is tied to and focused on that ideal exit strategy.
There’s a lot on your plate when you start a business. Of course, you need to be clear on your mission and vision, your business model, your market research, marketing and sales strategy and your operations to implement your business plan. You can be consumed by the day to day responsibilities and urgent demand. All of this eats up time.
There’s another critical piece that’s easy to put off but very critical to achieving your long term goals and that is your exit strategy.
If you set your exit strategy as part of your initial goal setting then all your goal achievements will lead towards your ideal exit strategy.
Here are 5 recommendations to ensure you set goals that get you to a successful exit:
1. Choose the right exit strategy for your goals
You have monthly and annual goals for your business. You want to commit to these intermediate goals only if they are aligned with your long term goals and the ultimate goal achievement of your ideal exit strategy.
2. Set business growth goals aligned with your exit strategy
Your growth goals are essential to the healthy, strength and survival of your business. When you look at your growth goals in the context of the exit strategy you want to implement, be sure your growth goals are taking you in the same direction. Growth that is in conflict with your exit plan or competes with your long term goals will hurt the business and limit your ability to achieve your exit strategy.
3. Identify goals to increase value
The value of the business is not just in terms of assets or cash flow. It’s also in your intellectual property. Your intellectual property could be in your team, your processes, the relationships you cultivate and maintain with clients and vendors, etc. So your goals to increase value before your exit could be in these less quantifiable areas that translate into a much higher valuation for the firm.
4. Plan your exit strategy by intention rather than by default
This sounds like a lot of work. In fact, it is. But, if you don’t do the work to plan your exit – then your dream of achieving an ideal lifestyle, living your legacy and leaving a dynasty – then you are abdicating both the responsibility and the reward. If you don’t plan your exit by design, then you will settle for what you get by default.
5. Systematize your exit strategy to maximize value
The more you can systematize your business so someone else can run it equally well without out you, the more a buyer will be willing to pay you to keep it going. The better you are at systematizing everything, the easier it is for a broker to pitch and leverage that value for a higher price. This step takes discipline and consistency starting long before you intend to exit.
Apply these five recommendations to get the results you want. That’s how you achieve every goal you set. That’s how you ensure your own successful exit strategy