WHAT WILL YOU PRIORITIZE AS YOU PLAN AND EXECUTE YOUR EXIT?
When it comes to selling a business, owners care about more than just money. In a survey of 315 business brokers and M&A advisors, representing 37 states, they indicate that cash at close is a key desirable for sellers, as is taking care of their employees. Getting out quickly and leaving a legacy are also highly valued. Results indicate that a relative minority of sellers are interested in employment contracts and other deal structures that keep them active in business.
Identifying your priorities when you make the decision to sell can lead to different exit plans.
Below are the results of what sellers care most about besides money in the survey:
- 83% - Cash at Close
- 70% - Taking care of the employees
- 58% - Getting out of the business asap
- 53% - Legacy of the business
- 11% - Staying with the business 3-5 years
- 7% - Other
Not surprisingly, deal structure is a negotiation factor in most transactions. That’s followed by negotiations over closing date, and an employment contract or non-compete contract for the seller. More than a third of deals include negotiations over reps and warranties as well as working capital.
Here are the results of the most negotiated items in the closed deals besides purchase price:
In addition, most sellers want cash at close, however, buyers and lenders like the seller to keep some skin in the game after the sale. Often times the deal needs some form of seller financing, earn-out, equity rollover, or other form of alternative financing to bridge the value gap between what the seller wants and what the buyer can bring to the table.
- 77% - Deal structure
- 45% - Closing Date
- 41% - Employment / non-Compete for seller
- 37% - Reps / warrants
- 36% - Working capital
- 13% - Basket / caps
- 8% - Other
Retirement continues to be the #1 reason to sell across all sectors with #2 being burnout and #3 the pursuit of new opportunities. As for timing, many business owners contemplate selling for months, if not years.
What does exiting your business mean to you? Is it your chance to build the fortune you've worked for? Is it a relief from the day to day grind of professional life? Is it an opportunity to promote or ensure the futures of deserving employees? Or is it the moment in which to cement your legacy that you've spent years building?
While each of these issues matter, it is likely that one or more may be your true priority and it's important to tailor your sale process to your priorities.
WORKING WITH A PROFESSIONAL BUSINESS INTERMEDIARY WILL PROVIDE THE EXPERTISE TO HELP YOU MAKE THOSE DECISIONS. A CERTIFIED BUSINESS INTERMEDIARY (CBI) FULLY UNDERSTANDS WHAT IT TAKES TO SUCCESSFULLY SELL A BUSINESS AND CAN BRING SIGNIFICANT VALUE TO THE COMPLEX PROCESS OF COMPLETING A SALE THAT WILL INCLUDE THE BEST POSSIBLE VALUE WHILE PROVIDING PEACE OF MIND.