As a business owner, you know the importance not only of keeping your business going and growing, but also of knowing what to do when you decide you are done. Of the many exit plans you may be considering (such as transferring ownership to relatives or friends, liquidation, or simply running down the clock), a common exit strategy which can both maintain the success of the business and generate the maximum profit for yourself is finding another business or investment group to acquire and perpetuate your business: the Acquisition Exit Strategy.
Here are some things to keep in mind, to help make this strategy a success for you:
- Choose the Right Acquirer For Your Business
Finding an acquirer with the right strategic fit and alignment with your business will increase the acquirer’s chances for success in keeping your business thriving after the transfer of the business is completed.
- Make Your Business Attractive to an Acquirer
Pinpointing and emphasizing the aspects of your business that offer the greatest potential for profit and growth will go a long way toward attracting potential acquirers. If a bidding war ensures, the possibility of a higher acquisition price can increase exponentially.
- Avoid the Temptation of Targeting a Specific Acquirer
If you have a specific business or group in mind to which you would most like to sell your business, tailoring your attractiveness to the business/group may make your business less attractive to others. There is also no guarantee that your preferred acquirer is genuinely interested in buying your business in the first place.
- Pay Attention to the Business Culture of the Acquirer
Your business brings with an associated cultural operating inclination (fast and loose, straight shooters, cautious, aggressive, conservative or liberal minded etc.). If the business culture of a potential acquirer is at odds with yours, there is a greater likelihood of the culture clash getting in the way of – and potentially preventing – the success of the business going forward. An acquirer with a culture more closely aligned with yours will have a greater chance of succeeding after the transfer of the business.
- Carefully Evaluate the Terms of the Agreement
If you’ve landed an acquirer and are set to make the deal, go over the terms of the agreement and make sure they won’t cause you grief after the transaction is completed. For example, a non-compete clause might make things difficult for you if your plan is to start a new business along similar lines as the one you sold.
If proper care is taken in the process of executing the steps of a well thought out acquisition exit strategy, the result can be profit and success greatly exceeding alternative strategies. Of course, we here at CPI are more than happy to help you with this.