Business Exit Strategy Steps

What are the steps to Exit Business ownership and the strategy involved? A Business Appraisal is a critical part of the strategy execution but it is only one of many actions. From our sister company Bankers Advocate, here is a list of the steps for a successful exit from Business Ownership:

How We Sell Businesses, the Details…

1. 1. Perform a certified business appraisal to establish market value. This attracts serious buyers more quickly, supports the price during negotiations and protects your investment.
   2. Review the appraisal with you. Help you decide whether to go forward with transferring or marketing the business, or begin enhancing the business to maximize value for a future exit.
   3. Initiate the marketing process with a Consulting Agreement and begin the Tax Minimization Analysis.
   4. Prepare a professional Business Profile to present your business to qualified buyers. Prepare a comprehensive Offering Package including all information a buyer will need to see. Buyers lose enthusiasm when they have to wait for these materials.
   5. Prepare pre-financing for your business (for the right potential buyer). This and the appraisal are key components for controlling price negotiations.
   6. Recommend any observable deferred maintenance. When Entering prospects see items that need fixing, they wonder about the things they cannot see.
   7. Make sure your facility and equipment leases are transferable. In some cases, we need to renegotiate these upfronts to avoid derailing a potential sale.
   8. Develop and implement the target-marketing plan. While simple in concept, this represents a significant body of work. Part of our plan will be to promote your offering within our network and numerous websites.
   9. Match your business with qualified buyer prospects already in the queue, and qualify new inquirers for financial strength, business skills, and other attributes, before we share confidential information or take up your time with them.
   10. Review the Business Profile with qualified prospects, after the Confidentiality Agreement, is signed.
   11. Visit the business with interested, qualified prospects. We always arrange these visits with you.
   12. Help prospective first-time buyers become familiar and comfortable with the process of buying a business.
   13. When a prospect is ready, prepare an offer and secure a deposit.
   14. Present (all) offer(s) to you.
   15. Accept or counter the offer.
   16. Once the sales price and terms are agreed upon and an offer is accepted, both parties complete and sign Disclosure Statements. Full disclosure helps both buyer and seller avoid lawsuits.
   17. Buyer Due Diligence. If the business is as represented, the buyer removes contingencies and the transaction proceeds. If due diligence does not confirm representations, the offer is renegotiated, or it is canceled, and the deposit check returned.
   18. Help buyer obtain financing approval, when necessary.
   19. Make sure every agreement of the transaction is in writing – including all contingencies and contingency removals. People forget things not written, leading to arguments and lawsuits.
   20. Prepare escrow instructions for the closing attorney. The instructions reflect the terms of the purchase agreement and will include a notice to creditors of the bulk sale.
   21. What happens in escrow:
       • Serves as a neutral communication link to all parties in the transaction
       • Verifies escrow instructions
       • Request Publication, Recording, and UCC lien search
       • Complies with the lender’s requirements
       • Request any demands from existing lienholders
       • Receives purchase funds
       • Prepares or secures other documents related to escrow
       • Prorate taxes, interest, rents, security deposit, etc.
       • Records UCC-1 and UCC-2.
       • Closes escrow once all instructions are carried out
       • Prepares final statements for the parties, which account for the disposition of escrow funds
       • Disburses funds as authorized, including lien payoff and commissions
   22. A partial list of items/answers needed to open Escrow:
       • Purchase agreement and addendums
       • Contingency removals
       • Sales tax number and applicable licenses
       • Seller and buyer names, addresses, SSN’s, tax ID’s
       • Deposit check
       • Lease info – rent amount, deposit, assigned through escrow or new lease, etc.
       • Estimated possession date, closing date, pro-ration date
       • Insurance Policies info – assumed or new policies
       • Tax information. Seller’s property tax bills
       • Required license information – are they transferable?
       • If corporations – names of officers authorized to sign
       • Allocate purchase price to Goodwill, Fixtures, and Equipment, Leasehold improvements, Licenses, Non- compete, Inventory and other assets guided by the Tax Minimization Analysis.
       • Inventory- Taken by buyer and seller or a third party?
       • Will the seller warrant machinery and equipment?
       • Will the seller warrant against any pending accusations, citations or violations?
       • Will a health or fire inspection be done? Will seller pay reparations?
       • Any contracts, leases or agreements to be assumed
   23. Before Closing: take care of any issues that many times arise.
   24. Close & Celebrate!!

Ready to start your Exit from Business Ownership? Call 561-325-9777 or email to find what your company is worth through our professional valuation services…