Around the Web: A Week in Summary
A recent article from Forbes entitled “How Proper Exit Planning Benefits The Buyer And Seller” explains the ways in which exit planning is beneficial for both the buyer and the seller in a business transaction.
Many people hold the belief that exit planning is only beneficial for the owner of the business. The belief is that the process is one that simply beefs up the appearance of a company with the sole end goal of putting more money in the seller’s pocket. While increasing the value of the business may be one of the benefits of exit planning, the process when done correctly benefits both parties in different ways:
The Buyer: When a business is properly exited, it should be easier to run for the buyer from the start. The goal of exit planning is to build the management team, staff and operations procedures so that a new owner is able to work on the business rather than in it from day one. In essence, exit planning reduces the risk a buyer is taking on when they purchase a business.
The Seller: An exit plan is designed to give the seller a goal-oriented action plan for their last days as owner. When executed correctly, the plan first helps the owner to determine how much they need to maintain their standard of living post-exit. Then the business is evaluated for potential improvements that can be made in order to increase the business’s value to that amount.
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A recent blog post from Viking Mergers & Acquisitions entitled “How Long Does It Take to Sell A Business?” explains the most common factors that impact the length of time it takes to exit a business.
Oftentimes the first question on a business owner’s mind when faced with the exit planning process is, “How long does it take?” While the average time it takes to sell a business is about 6 to 8 months, the reality is that time can vary greatly depending on the circumstances. Most commonly, the factors affecting the timing include:
- Using a business broker (or not) – The process tends to be much quicker and smoother with a business broker on your team.
- Marketing – The broker will deploy a number of marketing tactics such as listing the business on business-for-sale websites and reaching out to previously identified buyers. The better the marketing plan, the quicker the leads can potentially come in.
- Negotiation and Due Diligence – This piece of the transaction can take anywhere from two to six weeks alone.
- Closing – Assuming the previous step went well and both parties came to an agreement, the closing process can then present its own time challenges.
- Industry – The demand for the type of company will play a large role in how quickly it sells.
- Location – The desirability of the location of the business will also impact how quickly the business sells.
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A recent article from The Tokenist entitled “When is the Best Time to Sell a Business?” explains three key questions business owners need to ask themselves in order to determine when to sell their business.
As tempting as it may be to wait for the ‘perfect’ time to sell a business, the reality is that if a perfect time were to exist you wouldn’t realize it until after the time had passed. It is recommended that instead, business owners search for a good time to sell their business. In order to do so, they should ask themselves these three questions:
- Is your business ready to sell?
- Can the current market facilitate the sale of your business?
- Are you personally prepared to sell your business?
When the answer to all of these questions is a resounding yes, then it is a good time to sell your business. In the event that you are unclear on your answer, a business broker is a well-equipped professional for helping you navigate the sometimes overwhelming world of business sales.
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