4 Ways to Maximize Your Business Exit

Small Business Solutions

By Jerry Creighton, Sr. On Jun 17, 2024

A dilemma business owners often face is how to phase out of their business after many years as an owner/operator. One solution is to sell the business. The challenge is to do so with a maximized valuation driving the sale price.

Business Sell-Side Preparation: Exiting a business should be considered a business opportunity for a business owner, not an end of business activity. It should always be a goal included in your business plan … a plan to maximize a financial return vs. liquidation.

How well you prepare your business for an eventual exit transition will make a difference in your ability to sell at terms acceptable to you, your employees, business partners and shareholders. Preparing a Sell-Side due diligence assessment package is recommended to expedite final due diligence discussions and negotiations.

To make this happen, you will need to position your business as a worthwhile venture in someone else’s eyes. 

 Your Sell-Side positioning must include enough information to help a buyer make a buying decision. If done correctly, it will be a win/win event.

The Sell-Side Story: The job of the selling business owner is to build a story to convince others to buy. This is done by creating what I call a Sell-Side Story. The story content should provide solutions needed to reduce buyer risk concerns inherent in the industry and to include rationale for buyer growth and profitability. 

Buyers typically are looking for solutions to fill gaps in their capabilities for pursuing targeted opportunities. Business sale terms and conditions and financial valuations are adjusted up or down based on the acceptance of your Sell-Side Story, supported by due diligence reviews. 

Buyer Acquisition Fit: Buyers acquire a business for their own strategic reasons, not necessarily to operate the business as originally designed by you. Understanding the buyer’s motivation will define what your Sell-Side presentation should emphasize. Three buyer acquisition motivations: 

• Bolt-on acquisitions: The acquired company becomes a subsidiary of the buyer’s business. 
• Tuck-in acquisitions: The acquired company is absorbed into the buyer’s operations.
• Standalone acquisition: The acquired company is initially operated as previously designed 

Some Things to Address When Selling a Business

• Successor Training: Can the business function without the seller’s personal involvement? 
• Employee Loyalty: Will key employees remain post-acquisition?
• Customer Records: Will customers remain post-acquisition?
• Financial Books: Are business books in order?
• Intangible Assets: Will intangible assets (patents, customer lists, brand names, licensing agreements, R&D) be of interest to the buyer?
• Facilities & Equipment: Are fixed assets in workable condition?
• Inventory: Is inventory in salable condition?

Conclusion: Sell-Side due diligence preparation allows for a logical way to position your business as desirable, to develop wanted terms & conditions, maximize business valuations and bring in high financial returns. 

About the Author: Jerry Creighton, Sr., is managing member of The Creighton Group, LLC, a business development consulting company based in Randolph. The company’s mission is to enable early-stage business commercialization and to accelerate the growth of established businesses as needed for a business to have relevant, resilient and durable lifecycle longevity. Creighton is also the author of “The Quest For Durability –The Business Puzzle Method®.” Please visit: www.jerrycreighton.com.

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