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What is an Exit Plan Anyway?
By Jay Carter

I am going to share a secret with you. If you are reading this article and are unsure what exactly an exit plan is, you are in excellent company. As I have shared in previous articles, through my research on the topic, I have found that depending on who you ask, you’ll get a different answer based on their own experience and point of reference.

If the question was, “What is a will?” or What is a lease agreement?” or “What is a tax return”, you would get pretty consistent answers, regardless of whom you ask. However, when the question is, “What is an exit plan?”, the answers will be all over the place. Lawyers focus on minimizing risk and estate issues. CFA’s look at accounting issues and taxes. CFP’s look primarily at financial resource planning and protection. Business brokers and M&A advisors concentrate on the value of the business and the timing of a sale transaction. The trouble is that while each of these activities is important to a business owner’s successful exit, none of them is an exit plan.

This is both understandable and confusing. Each professional naturally focuses on their area of expertise and, occasionally, on how they are compensated. But the truth is that it is none of these professionals’ primary role to help you understand and execute a plan to achieve your ideal outcome, so there is a lot of confusion for business owners.

Think of it this way. You want to go on a big trip to celebrate your 60th birthday. You and your partner have been looking forward to this 2-week European trip of a lifetime for years. You look through the travel books, talk to friends about where to go and what to see and watch a few documentaries on Netflix. You’re excited and begin to make plans. You may call a travel agent for help, or you may do some research online.

Planning for your exit from your business requires the same steps as planning for this trip. You should know where you’re leaving from and where you’re headed to. You should know how much you want to spend (or how much you need to receive for your business) before you commit to the trip. You should know exactly what you need to take with you, such as itinerary, tickets, valid passport, visas (requisite legal/financial/corporate documentation data and analysis), and you need a list of all the things you need to do to prepare for the trip.

You may have talked to your CPA or your attorney about your desire to sell your business sometime. You may even have set up a trust or a talk about tax strategies, but these are not exit plans. Just like calling Uber for a ride to the airport or making hotel reservations are not the same thing as plans for a trip.

Takeaway: Your trip of a lifetime will have a chance to be everything you dream it will be only if you do the requisite groundwork.

Your business is likely your largest single asset and planning for your exit cannot begin too soon. This is not about a two-week dream vacation—it’s about your dreams for the rest of your life.

So, what is an exit plan anyway? An exit plan is essentially a strategic plan for your business with a deadline and it consists of three core elements:

1.) Your ideal outcome: as the owner of the business, this is what you want to accomplish from exiting the business (financially and otherwise),
2.) A baseline assessment of where your business is today: how you compare to others in your industry, what the strengths and weaknesses of your business are from the perspective of the market, and what it is worth,
3.) A blueprint: a detailed plan that connects the dots to prepare yourself and your business for a successful exit transaction at a target date in the future

For more information about the three components of an exit plan, please visit our website www.market-view.com or Facebook at https://www.facebook.com/MarketViewJLCarterGroup/

Are you ready?
If you’d like to learn more about positioning your business for a successful exit transaction, please contact Jay Carter at Market-View. We’d love to have a totally free and confidential conversation to learn about your unique situation and show you how you can have your executable plan within 45 days.

Reach us at:

Market-View
Jay Carter
Founder and CEO
704-904-7543
[email protected]
www.market-view.com

What is an Exit Plan Anyway? What is an Exit Plan Anyway? By Jay Carter I am going to share a secret with you. If you are reading this article and are unsure what exactly an exit plan is...

Now is Not the Time to Sell Your Business
By Jay Carter

This seems pretty simple and obvious, and it is---but it’s important that small business owners understand how the COVID-19 pandemic has impacted the value and the salability of your business. More importantly, what you should be doing now to preserve the value you have position it for a successful sale at a fair valuation and on fair terms in the future.

We just ended a multi-year run of strong merger and acquisition activity. It was a true seller’s market. There were plenty of private equity and strategic buyers competing to acquire private businesses, driving valuations up to some of the highest levels we have ever seen.

Things were going great until COVID-19 hit and the tables turned. Suddenly, a strong seller's market became NO market, and now a strong buyer’s market is emerging.

Those buyers who were around before COVID-19 are, for the most part, still around, they still have plenty of cash, and they are still looking to grow their businesses by making acquisitions.
The problem is that buyers take advantage of sellers when there is even the tiniest crack in their armor. They smell blood in the water and it becomes a feeding frenzy.

I have spent 25 years studying buyer behavior and using those findings to help business owners obtain maximum valuations for their businesses.

Even during normal times, if a businesses’ sales or profitability slip a month or two before closing, they are likely to hammer by the buyer on the price of the business or the cash they get at closing. It’s not because the business is less valuable to them—it’s just because they can. They are in the business of buying companies at the best price possible and either selling them at a higher price or using their profits to make their business more valuable.

So, what do you think buyers are doing now, in the midst of a global health and economic crisis? They’re doing exactly what you would expect them to do: they are hammering businesses on valuation based on lost sales and profits, and they are also hammering them on potential future sales and profits because of the uncertainty created by this crisis. This is not a just crack in the armor for sellers, it is a complete disrobing! Now is definitely not the time to sell your business!

But there is something you can and should be doing to that will enhance the value of your business. First of all, stop worrying about what your business is worth today. If you are not going to sell it now, it really doesn’t matter what your business is worth in theory on paper. Instead, start working immediately to position your business so you will receive maximum value and the most favorable terms when you do sell it in the future.

As business owners, we can’t control how long this recession lasts, but we can take high impact steps now that will level the playing field and enhance our appeal to buyers once the recovery comes. All we need to do is prime our business now so when the market improves, our businesses are at the front of the line, in the very best position to achieve higher valuations and more favorable terms.

The Don’t Sell/Get Ready Checklist
Over the years, we have identified over 100 unique Value Factors that can impact both the valuation of a business and its salability (or attractiveness) in the marketplace. When we evaluate a business, we evaluate each Value Factor and assign it to one of three categories: 1) Value Driver, 2) Value Detractor/Value Opportunity, 3) Value Neutral. A business with 70% or more Value Drivers is in the top 25% of all businesses and is generally considered attractive to buyers.

One of the most valuable things you can do for your business right now is to get a handle on how your business compares to others in your industry and specifically what buyers are seeking from acquisitions of businesses like yours. As part of this process, thoroughly assess your Value Factors, paying particular attention to the Value Detractors/Value Opportunities. Once identified, this is an excellent task list to begin the process of preparing your business for a future sale.

From our list of over 100 Value Factors, below are a dozen Value Factors that are high impact and apply to virtually all industries:

1. The company has a diversified customer base with no customer > 15% of total revenue.
2. The company has a diversified supplier/vendor base with no supplier/vendor > 15% of total purchases.
3. The company has a retention program to ensure key employees don't leave the company before a sale.
4. The owner could take a 4-week vacation without checking in, with confidence that everything will be fine when they return.
5. The owner has a good understanding of how much the business is worth today.
6. The company’s gross and net profit margins are above industry averages.
7. The company’s working capital is being effectively managed with a future sale in mind.
8. Inventory is fresh and relevant to the company’s current business.
9. The company produces timely, accurate monthly financial statements.
10. The owner reviews financial statements monthly, at a minimum.
11. The company’s products/services sufficiently differentiated from competitors'.
12. The company has a written business or strategic plan.

4 Takeaways
 Now is Not the Time to Sell Your Business
 Now is Not the Time to Put off Essential Planning
 Now is the Time to Take Steps to Prime Your Business and Enhance Future Value and Salability

If you’d like to learn more about positioning your business now for a successful future exit transaction, please contact Jay Carter at Market-View.
We’d love to have a totally free and confidential conversation to learn about your unique situation and show you how you can have your executable plan within 45 days.

Reach us here:
Jay Carter
Founder and CEO
Market-View
704-904-7543
[email protected]
www.market-view.com

Now is Not the Time to Sell Your Business Now is Not the Time to Sell Your Business By Jay Carter This seems pretty simple and obvious, and it is---but it’s important that small business owners under...