It can be said with some certainty that most entrepreneurs and business owners don't put a lot of thought into the end of their career when their business is thriving. But failing to have a well thought out exit strategy early in the journey could cause significant complications when a business owner decides to sell the business and exit.
There could be a variety of reasons that a founder decides to sell. Family emergencies, creating time to build a new business, wanting to capitalize on the value they’ve created, or sometimes it’s just time to move on. The motivations or situations triggering a sale could be any number of very unique circumstances.
The Role Of Succession Planning In Preparing To Exit
Whatever the reason, it is crucial for founders to know their “why” when they set out to sell their business. And if their reason includes exiting the company completely, a well-thought-out succession plan could be the difference between a successful sale and a failed deal.
According to Forbes, robust succession planning is a major consideration when exiting a business. And among the top reasons succession plans fail is because new leaders haven’t been given adequate time to be properly mentored and prepared to take over the business.
Buyers are reportedly uncomfortable with businesses where founders or owners are the only points of contact and control every aspect of the business. They would typically need assurances that the remaining management team can operate the business even after the owner departs.
It can also be essential to make sure that key management team members understand the plan ahead of time, and know their roles in the organization under the new business owners - as they will likely be the ones with access to important company documents and processes, and can assist with crucial steps relating to the sale process.
Any uncertainty arising from an unexpected announcement of the proposed sale of the company could result in team members feeling insecure and taking steps that may jeopardize the pending transaction.
The Role Of Experts Is No Less Important
Selling a business is a complex and lengthy process that requires extensive industry expertise regardless of the value of the sale.
Large value business acquisitions or mergers often involve investment banking firms. For example investment banking firms Goldman Sachs Group Inc. GS and JPMorgan Chase & Co. JPM advised on deals valued at over 2 trillion dollars last year, according to Statista.
Companies like Exitwise are in the space of advising founders on mergers and acquisitions in the lower middle market, and are reportedly sought out by business owners for their deep expertise during every stage of an exit journey.
The Michigan-based company says it focuses on serving founders and business owners with annual revenues of up to $ 250 million in more than 200 industries.
The company reports that its leadership has founded and sold multiple companies. Founder and CEO, Todd Sullivan has more than 20 years of experience founding, growing, and selling technology companies in Silicon Valley, Chicago, New York, and Detroit.
Exitwise says it has indexed hundreds of investment bankers, M&A attorneys, wealth advisors and tax accountants by average transaction size, success rate, and exit value. Exitwise’s mission is to leverage this global network of M&A experts to create exceptional outcomes for its founder clients.
To learn more about Exitwise visit its webpage.
This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.
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