March 20, 2013

A strong exit strategy will pay off on several levels

After a company owner arrives at the conclusion of "I want to sell my business," the process of actually doing so is one that takes care and consideration. A strong exit strategy does not have to take years to construct, but without using business valuation resources, for example, it will be more difficult to find an acceptable selling price.

Another reason to account for as many different parts of the organization as possible is to put the seller's mind at ease. Serial entrepreneurs and long-time company owners alike need to know that the organizations they build are in good hands. It could be more difficult for someone to move on to another business venture, or even enjoy retirement, if they are uneasy with a merger or acquisition that took place.

According to Roger Murphy, president of a Florida-based business brokerage firm, a lot of business' owners personalities are tied to their company. An owner's stature as a businessman or woman makes them important.

"So, often, they will sell a business and sit at home or play too much golf – they are suddenly not important anymore," he told The Houston Business Journal. "It can be hard. A lot of business owners fail at retirement."

A key way to avoid buyers' remorse is be as prepared as possible. It is important to understand all aspects of the process so there are few surprises along the way, such as in the due diligence portion. Sellers need to understand that questions will be asked and many aspects of their company will be under scrutiny. But it is all part of the process of M&A activity.

Everything from what a business owner's new position will be – or not be – to a selling price should be considered before entering discussions for a merger or acquisition. More preparation will only help everything run smoothly and put owners' minds at ease.