When we speak to busy owners regarding their exit strategy, one of the most frequent misconceptions is that they think they should exit when their business is in perfect shape. This scenario usually goes hand in hand with, what we call, "The magic 3 statement".
“Our plan is to exit the business in about 3 years!”
It never ceases to amaze us at Boss Equity, the high proportion of executives who have a three year exit plan that, unfortunately for most, never gets any closer. They want to ‘get their business in shape’ first and then exit. Now, we don't advocate selling an underperforming business or a business with poor cost-efficiencies, internal sales, marketing, procedures etc - Quite the opposite.
Ironically though, a large percentage of buyers want the opportunity to quickly add value to their new acquisition, increase performance and generate a dependable and worthwhile ROI for their investment. We find too many owners remove this potential for buyers as they are trying to perfect their business in preparation for a trade exit.
This is one of the reasons their exit strategy is permanently three years in the future. It is impossible to have the perfect business; you can’t eliminate every kink from your organisation and, if you did, what would be the upside for the buyer post acquisition?
To attract the right buyers, you need to leave some 'meat on the bone'; they need to be able to clearly see the improvements they can make. On occasions, this may even include elements they can add as new owners, which are completely outside of your field of expertise and which will take the business to another level.
If you recognise that your organisation has a permanent three year exit plan, which looks unlikely to come to fruition, come and talk to us so we can help you to truly prepare your business for sale within a realistic timeframe.
We will give you our unbiased and candid opinion, which admittedly may initially not always sit comfortably, but it will always be geared to helping you achieve the best value from your trade sale.
Boss Equity - We unlock the hidden equity value in software tech SME's in the USA, Continental Europe and Asia Pacific.
