Does your company have an exit strategy? How would a ‘business sale plan’ increase the value of your business?
Creating your exit strategy
Business owners that manage to complete a sale of their company almost always have a sound exit strategy. Their ‘business sale plan’ sets out (years in advance) how they are going to sell and even who they might sell to. Every business can (and should) have one.
Owners of businesses that sell for their maximum value don’t leave their exit strategy to luck. They know that the value of a business depends on maximising the factors that will appeal to a potential buyer as the business is being built.
What is your exit strategy?
When a buyer is persuaded to pay maximum value for a business (such as when Facebook paid $1billion for Instagram) it usually does so for business strategic reasons (rather than simply to increase turnover). Instagram offered Facebook an opportunity to own a type of social network that it didn’t already operate (and had tried and failed to develop itself). The strategic reason was that Facebook was buying a business that helped protect itself against changes in online social activity.
The goal of an exit strategy is point your company in a direction that makes your business a ‘must-have’ business.
To do this you need to think like a prospective buyer. What type of business will be a strategic fit with your business? That will be your best potential buyer. Alternatively, an exit strategy can plan to change your business to make it a strategic fit with their business.
Your exit strategy (in two parts)
It is never too early to create a business sale plan. Business owners that are successful in selling a business do it by achieving two things. Business owners that sell their business for big bucks do these two things very, very well. (1) they create a clear vision for the future of their business; (2) they persuade a potential buyer that this vision is also the future of the buyer’s business.
The best exit strategies are based on this philosophy. Forward thinking business owners use a business sale plan to create a ‘must-have’ business. The future template for a business as big as Facebook is worth a lot of money indeed.
A great exit strategy should identify who the buyer of your business will be. This doesn’t need to list a specific name (e.g. “Facebook”), but instead think about the profile of business that would be a good strategic fit to buy your company. This is driven by two factors: (1) who your clients are; (2) what industry niche you occupy. The good news is that both of those are within your control.
A great business sale plan creates a vision for the future your business & industry.