How to negotiate an exit strategy when selling your business
How to negotiate an exit strategy when selling your business
When selling your business, you need a good exit strategy for the deal to work out in your favor. Leaving at the right time will ensure that you minimize your losses and maximize your profit on your way out the door.
Of course, an exit strategy is something that must be negotiated. You and your buyer will need to come to terms on the compensation and benefits you’ll receive when you leave the business.
Below, we’ll briefly explain how to negotiate an exit strategy. We’ll start by walking through some steps on how to prepare; then we’ll offer some tips to help you minimize your losses and maximize your profits on your way out the door.
1. Choose your exit strategy
There are several types of exit strategies to choose from:
Merger and acquisition —M&As are a type of exit strategy where you sell your business to another business (or are “acquired”).
Initial public offering — IPOs are a type of exit strategy where you sell shares of your company to the public.
Selling to a partner — Some business owners exit by selling their stake in the company to a business partner.
Acqui-hire — Some business owners focus on building a high-performing team and sell to a buyer who wants to acquire that team.
Buyout — A buyout is a strategy in which the owner sells to one or more members of their management team.
Liquidation — This is the strategy of selling off all of the business’s assets to pay off its debts.
Each of these strategies has its own benefits. Choosing your preferred strategy before you go into negotiations will help you to negotiate your exit strategy more effectively.
2. Get a professional business valuation
If you want to walk away from your business feeling like you got a fair deal, you need to know what your business is worth. Hire a consultant to do a business appraisal before you start negotiating your exit strategy. Going into negotiations knowing your business’s value will help you get the best deal.
3. Determine what you want from the deal
Another thing to do before you go into negotiations is to determine the terms that are most important to you. Do you want to have some decision-making power in the business after you leave? Would you prefer to leave the business altogether? Answering these questions ahead of time will ensure that you walk away with your desired terms in place
4. Consult a professional
A professional business broker can help you negotiate your exit strategy, managing the deal from beginning to end to make sure you get what you deserve from the sale of your business. They’ll act as a liaison between you and your buyer, relieving you of all the stress that comes with selling a business.
Lion Business Brokers knows how to negotiate exit strategies
We bring a combination of strategic insight, business expertise and cutting-edge technology to the table to help our clients sell their businesses. We are trusted mergers and acquisition advisors who can help you get what you want out of your exit.
How to negotiate an exit strategy when selling your business
When selling your business, you need a good exit strategy for the deal to work out in your favor. Leaving at the right time will ensure that you minimize your losses and maximize your profit on your way out the door.
Of course, an exit strategy is something that must be negotiated. You and your buyer will need to come to terms on the compensation and benefits you’ll receive when you leave the business.
Below, we’ll briefly explain how to negotiate an exit strategy. We’ll start by walking through some steps on how to prepare; then we’ll offer some tips to help you minimize your losses and maximize your profits on your way out the door.
1. Choose your exit strategy
There are several types of exit strategies to choose from:
Each of these strategies has its own benefits. Choosing your preferred strategy before you go into negotiations will help you to negotiate your exit strategy more effectively.
2. Get a professional business valuation
If you want to walk away from your business feeling like you got a fair deal, you need to know what your business is worth. Hire a consultant to do a business appraisal before you start negotiating your exit strategy. Going into negotiations knowing your business’s value will help you get the best deal.
3. Determine what you want from the deal
Another thing to do before you go into negotiations is to determine the terms that are most important to you. Do you want to have some decision-making power in the business after you leave? Would you prefer to leave the business altogether? Answering these questions ahead of time will ensure that you walk away with your desired terms in place
4. Consult a professional
A professional business broker can help you negotiate your exit strategy, managing the deal from beginning to end to make sure you get what you deserve from the sale of your business. They’ll act as a liaison between you and your buyer, relieving you of all the stress that comes with selling a business.
Lion Business Brokers knows how to negotiate exit strategies
We bring a combination of strategic insight, business expertise and cutting-edge technology to the table to help our clients sell their businesses. We are trusted mergers and acquisition advisors who can help you get what you want out of your exit.
Learn more about our seller representation services today!
Categories
Advisors
Archives