Articles Tagged ‘Financial tip’

Exit Planning: Indecision is the Wrong Decision

Wednesday, January 26th, 2011

Presented by T. Ray Phillips

“I haven’t decided what I ultimately want to do with my business, or
when I want to exit, or how much money I’ll need, or whom to sell to, so how can I plan my exit? Besides, I don’t want to exit right now.” If
you’ve said this, or thought it, you are not alone. Many business owners are either overwhelmed with the thought of exiting or are so busy fighting daily business fires that they think they cannot plan their exits.

Know that in your indecision, you are making a decision. As Winston
Churchill observed, “I never worry about action, but only about
inaction.” When you take a passive attitude toward the irrefutable fact
that you will-one way or another-leave your business, you are deciding
to settle for a least profitable exit for yourself and for your family.

If you are an owner who isn’t sure about what you want, or when you want
to leave, why is it so important to decide to act today? Why can’t you

* Preparing and transferring a company for top dollar takes
time-on average about 5 years. Most of those years will be spent
preparing the business for the transfer. If you decide to sell to
employees or children (two groups who rarely have any money), they’ll
need that time to earn the money to pay you for your interest.
* More time often equals greater reductions in risk. Time can be
used to design and implement income tax-saving strategies, build value,
strengthen your management team, begin a gradual transfer of ownership
(not control) to key employees or children. If you wait too long, you
probably won’t have time to implement these strategies and you’ll likely
end up transferring your business on less-than-ideal terms.
* The market does not operate on your schedule and may not be
paying peak prices when you are ready to sell to an outside party.
Witness the state of the M&A market in 2008 and 2009: activity is almost
non-existent in many business sectors and down in almost all.

If leaving a company you’ve worked so hard to build and having little or
nothing to show for it, is unacceptable to you, let’s look at a few of
your options.

Wait for a buyer. According to Deloitte’s Entrepreneurship UK: 2008
survey, 35 percent of business owners said they will wait for a
third-party offer for their businesses. Owners in this group believe
that one day a buyer will contact them, negotiate a sale, and that will
be that. Well, this is a decision of sorts-but one that flies in the
face of reality. While few businesses are being sold today, there will
likely be a significant number of Baby Boomer business owners vying with
you to sell their businesses when the M&A market recovers.
read full article »

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