FacebookYoutubeLinkedIn
Live data feed: 7pm 28th Mar 2024         Total Business Sales: $521.9 million         ROI On Capital Invested: 28.00%         EBITDA To Owner: $157.2 million         Recent Deals: Automotive Transport Accessories Manufacturing - Safety - Strategic acquisition by Trade Player     |     Agricultural - Automated Feed Systems - Investment by private Home Office     |     E-Commerce, Online Prestige Fountain Pens, Stationery Supplies - Strategic acquisition by private investor

75% Of Owners Are Ready For Their Exits, But Their Businesses Arent

Garry Stephensen

Article Author: Garry Stephensen
Position: Managing Director
Read time: 4 mins

Share Article:

EXIT PLANNING

75% of Owners Are Ready for Their Exits, But Their Businesses Aren't

If a buyer offered you enough cash for your business to provide you with complete financial security, would you sell today? If your answer is the same as 75% of the owners who answered this question in The BEI 2016 Business Owner Survey, then it's a resounding "yes."

Owners are ready to exit today, if the price is right.

Here's the conundrum: While owners may be ready to exit their businesses, far fewer businesses are ready for their owners to exit. Only 26% of surveyed owners believed that they faced no obstacles to exiting their businesses successfully. However, my experience working with owners suggests that this number is optimistic.

Preparing your business for sale now—before you feel the need to exit because of burnout, health issues, competitive pressure, or other outside factors—ensures that you can leave your business on your own terms and achieve all of your financial and other exit goals. An exit plan provides you with flexibility, leverage, and negotiating power.

If you are prepared for the sale but your business isn't, you will have to deal with the frustration of making the business ready for sale after you have already checked out mentally. Even worse, you may inadvertently taint the marketplace—a common risk for owners who attempt to sell their businesses before their businesses are ready to be sold.

Owners taint the marketplace when they contact the likeliest buyers for their businesses and those buyers subsequently express little or no interest in buying their businesses. The owners' lost time and effort are not the only losses that they face.

When a business is pulled off the market without selling, it is difficult to re-enter the market later, when the business is finally ready to be sold. Once buyers have rejected a business, they are unlikely to take a second look. They aren't going to waste more time looking at a business that they've already rejected.

Instead of jumping the gun on a sale, there are two actions I suggest you consider.

1) Determine the likely sale price of your business before you go to market.

In my experience, investment bankers and many business brokers will provide you with an estimate of your business' likely sale price today, at no cost. If the likely sale price is insufficient for you to exit your business with financial security, don't go to market. Instead, begin planning and taking action to create sufficient value. Even if you don't intend to exit for years, it is useful to obtain a realistic estimate of your company's value now. It will help you determine by how much you need to increase your business' cash flow and value before you can sell the business and be financially secure.

Contact Lloyd's Business Brokers Melbourne today for up to date business advice. Lloyds have brokers on the ground in Sydney, Melbourne, Adelaide and Brisbane.


2) Increase transferable value.

Transferable value is what a business is worth to a buyer without the owner's continued involvement. Essentially, if the business requires the owner's presence to maintain and increase cash flow, the company, without the owner, has limited value. Thus, if the owner is ready to leave before the business is ready to continue without the owner, it is necessary to develop transferable value.

Depending on the size of the value gap, it may take 5–10 years of focused effort to create adequate value. When owners who are ready to exit discover that it will be years before their businesses are ready for their exits, having to continue their ownership may be more than they can bear, and a fire sale often ensues.

Preparing your business for a sale before you prepare yourself positions you to sell your business when you want, for the money you need, and to the person you choose.

Article courtsey Axial Forum

As seen in the Financial Review and the Courier Mail.

The Lloyds Advantage
 
 
The Lloyds Advantage
Maximum Value, Fast!
We specialise in achieving the maximum sale price for your business with the best possible deal structure for you and within a fast timeframe.
 
 
The Lloyds Advantage
Real Business Experience
Lloyds have over 40 Years of industry experience with a team of passionate and qualified business brokers, specialising in mid-market business sales of $1 million to $100 million.
 
 
The Lloyds Advantage
Free Business Appraisal
A qualified business broker will provide you with an obligation free, pre-sale appraisal of your business, so you know what approx timeframe and price to expect before proceeding.
 
 
The Lloyds Advantage
Access To Buyers
Lloyds has an Australian and International reach, with a database of over 50,000 prospective buyers and equity firms ready to start marketing your business to.
 
 
The Lloyds Advantage
Confidentiality Guaranteed
With discrete marketing techniques your confidentiality before, during and after the sale process is guaranteed.
 
 
The Lloyds Advantage
Step-By-Step Guidance
We step you through the process finding the right buyer, preparing to achieve maximum sale value and closing the sale.
 
 

 

Business Broker - Garry Stephensen

Garry
Managing Director
Business Broker - Karen Dado

Karen
Director NSW
Business Broker - Geoffrey Tulett

Geoffrey
Lloyds Corporate Partner - Mergers & Acquisition Specialist
Business Broker - Edward Alder

Edward
Director Victoria
Business Broker - Kevin L Sutherland

Kevin
Director International Business Sales
Business Broker - Dianne Reynolds

Dianne
Research Director and Corporate Broker
 


 
Lloyds Corporate Brokers is a Corporate Authorised Representative under AP Lloyds Pty Ltd.
Australian Financial Services License 526061
Recent Press Releases:

Copyright 2018 © Lloyds Business Brokers 2008