Value Enhancement and Exit Readiness
All business owners will one day exit their business, either voluntarily or involuntarily; being prepared just makes sense. If exiting is in your short term plans, there are steps you can take to enhance the value of your business and make the process smooth and rewarding. And even if you have no specific exit plans, the steps to enhance business value also make great sense for optimizing performance, and will ensure you are ready in case unforeseen circumstances expedite your exit.
Approach: Value Enhancement and Exit Readiness (VEER) Assessment
- Goals Assessment
- Identify business, personal and family goals
- Provides a framework for the entire exit plan
- Financial Needs Assessment
- Determine how much is needed from the sale to achieve goals
- Normally prepared by personal financial planner
- Business Value Enhancement
- Determine approximate “baseline” value of business
- Identify and implement measures to increase value of business before exit
- Exit Options Analysis
- Assess the advantages and disadvantages of each exit option
- Identify exit option(s) that best achieve goals
- Net Proceeds Analysis
- Calculate net proceeds to be received under each exit option based on various value/sale price assumptions
- Action Plan
- Identify and prioritize specific tasks
- Assign responsibility and identify timing of tasks
- Schedule regular meetings with those accountable to ensure success
Once you have your VEER assessment in hand, you will know exactly what needs to be accomplished to ensure your business is “exit ready”, and to maximize its value in the eyes of potential purchasers. Your A-R Partners Exit Planning professional will continue to work with you, through a series of monthly or quarterly meetings, to ensure that actions are completed, that the plan is updated with any new information or changing circumstances, and that new actions are identified and assigned. Exit planning is a process, not an event. And when the time comes that you are ready to “pull the trigger”, we will be right beside you throughout the whole process.
- According to a survey by PriceWaterhouse Coopers, 12 months after selling, 75% of business owners surveyed “profoundly regretted” the decision to sell.
- According to CIBC “In Focus”, “close to 60% of business owners aged 55 to 64 have yet to start discussing their exit plans with their family or business partners”.
- According to the Family Firm Institute, only 30% of family-owned businesses survive into the second generation.
- According to the Exit Planning Institute’s 2013 State of Owner Readiness Survey, 2/3 of business owners are not familiar with all their exit options, and 49% of have done no exit planning at all.
However, with the “baby boomers” generation of business owners reaching retirement age, there may be competition among business owners to find a good buyer. A CIBC “In Focus” report in November 2012 forecasted the “business exit rate to rise rapidly in the coming decade”, and estimated that 40% of British Columbia business owners plan to exit their business in the next five years. Those owners who have readied their businesses for exit, and whose businesses are optimized for transition to a new owner, will have a tremendous advantage over those that have not addressed their business exit plan.
If you anticipate exiting your business in the next five to ten years, contact us for a free, no obligation consultation.