Exit Strategies Can Lead to More Money in Your Pocket!

by Hugo Martin 4th of April, 2023
Exit Strategies Can Lead to More Money in Your Pocket!
Exit Strategies Can Lead to More Money in Your Pocket!

They say that the hardest part of being a parent is letting go of your children! Having provided the nurturing, care, support, teaching, training, education love and support that is part of the role of a parent, feeling that they will never make it without your support, it is very difficult to let go! 

Have you prepared yourself for the day?  Does this sound familiar? Does owning a business have similar resonances? Do business owners need assistance in letting go? Do you have an exit strategy? Are you subconsciously thinking, will I ever get the money I believe my business is worth? 

The answer will invariably lie in ensuring that you have prepared yourself for the day, with an active exit strategy that is structured with timelines and actions. An exit strategy to ensure you get the most money in your pocket typically starts like this;

 

1. Preparation

 

Make sure your business in tip top condition. This will involve presenting the financial information for sale, and not for tax purposes. Get your accountant to review and normalise (adjustment) the accounts to reflect the operations revenue and costs in order to show the optimal returns the business generates. Address any legal or structural issues with the business. Make sure that the business is fully compliant with the relevant legislation that applies to your business. If it is going to be a share sale, make sure the balance sheet doesn’t have any encumbrances. 

 

2. Valuation

 

You should determine the market value of your business before deciding to sell. Use business broker who is a Registered Business Valuer (RBV)  to establish a market price for your business. An RBV has access to market data and has undergone rigorous training to provide a fair market value for your business.

 

3. Appoint an AIBB (Australian Institute of Business Brokers) accredited business broker

 

They will  manage the sale process. A business broker will be able to advise you when your business is ready for sale and advise on the sale process.

 

4. Selling

 

Once a business broker has been appointed, an Information Memorandum or Prospectus will be developed that outlines and highlights the key features and benefits of the business. Then a detailed sales strategy will be determined that identifies the optimal channels and  potential buyers for your business.

 

5. Due diligence

 

Make sure your business in tip top condition. This will involve presenting the financial information for sale, and not for tax purposes. Get your accountant to review and normalise (adjustment) the accounts to reflect the operations revenue and costs in order to show the optimal returns the business generates. Address any legal or structural issues with the business. Make sure that the business is fully compliant with the relevant legislation that applies to your business. If it is going to be a share sale, make sure the balance sheet doesn’t have any encumbrances. 

 

6. Employees

 

If key employees is critical to the sale, develop a transition plan.

 

7. Suppliers

 

If your business depends on specific supply chains or suppliers, develop a plan to transition those agency agreements. With multiple supply agreements a share sale may be the only pathway to a successful sale.

 

8. Negotiator

 

This is where a business broker becomes critical, they will negotiate the most favourable terms of the sale, how to get the top dollar for your business.

Overall, the key to getting more money in your pocket from the sale of your business is to be well prepared, to foresee any encumbrances or roadblocks and address them prior to putting your business on the market.

Tags: small business expand selling success entrepreneurs

About the author


Hugo Martin

Hugo has over 15 years’ experience as a Business Broker and he is also a Registered Business Valuer. He was awarded Queensland Business Broker ...

view profile


Related Articles

The Impact of Covid on Small Businesses in Australia

23 February 2023

The Impact of Covid on Small Businesses in Australia

The effects of the Covid-19 pandemic have been felt across the world, and Australia is no exception. In partic...

Business Growth Equals Great Result For Kate’s Hair Salon Sale

6 November 2022

Business Growth Equals Great Result For Kate’s Hair Salon Sale

Kate originally listed her business for sale in 2019. With a solid buyer not presenting and time on her side...

Funding Exit Strategies for Small Businesses

18 October 2022

Funding Exit Strategies for Small Businesses

Approximately two-thirds of Australian small businesses are family businesses, but less than 20% of these have an...

Looking to Buy a Business in Adelaide? We've Got You Covered

1 October 2022

Looking to Buy a Business in Adelaide? We've Got You Covered

South Australia's capital city of Adelaide is well known for its rich atmosphere, wine and food festivals, an...