Exiting your business is often thought of in terms of financial statements and hard numbers, but equally important, if not more so, is the emotional side. Your business is a living entity you have spent most of your adult life in, toiling daily. Your children might have spent several evenings there. Mine sure did. Parting with it translates to parting with a significant part of your life. So plan it meticulously and thoughtfully.

According to BizBuySell.com, most business owners exit for personal reasons. Retirement is the biggest reason (cited by 43% of business owners), followed by burnout (27%), high business value (18%) and underperformance (10%). Whatever your motivations, they need to be foremost in your mind as you embark on this journey. It will shape your actions and decisions.

In my previous column – the first in this series – I outlined why planning for your exit is so important. Next month I’ll go over the factors that affect how a business is valued and strategies distributors can use to increase the value of their companies. Here in this article, I outline nine steps that will serve as a guide for a successful exit.

1. Write Down the Reasons for Your Exit

This assumes, of course, you’re exiting on your terms. Write down your reasons and, even better, divide them into business, financial and personal. These reasons will help preserve your sanity when your emotions go haywire. I have my list on my laptop desktop, which has come in handy more than once since my exit in 2022 when I sold my distributorship. Think about how you plan to keep yourself occupied. This isn’t as easy as you think. You can only go on so many vacations, spend so much time in front of the screen, golf and engage in “fun activities.” Most important, is your spouse onboard with your decision?

2. Know the End Result You Seek

What do you want from the sale – money, time, exploring new opportunities or retirement? Don’t assume it’s always money. What if you receive a decent value for your business, and the buyer wants you to stay onboard for three or even five years? Is that the outcome you’re interested in? I sure wasn’t. Here’s another scenario to consider: Would you be satisfied being a subordinate with all the same flexibility you had when you were the head honcho? Prioritize the result you want.

3. Inventory Your Financial Resources

After you have all the intangibles worked out, and before you get too deep in the process, look at the resources you would lean on after the exit – the most important being financial. Did you account for all the financial obligations and commitments coming up? Did you save and invest “enough” for your golden years, or are you counting on the payment from the sale?

4. Compare Your Business to Industry Standards

It’s very important to have this written out. Run a SWOT analysis and produce a report. Let the prospective buyers know what makes your business better in terms of financial performance, talent pool, quality of long-term clients, dependable suppliers with favorable pricing agreements, proprietary software/technologies, brand recognition, market positioning and other positives that justify your desired asking price. Also, share the market expansion plans, one or two years of projected growth, favorable industry trends and other opportunities. Provide as many reasons as you can, backed with facts and data, to make prospective buyers feel that buying your business is a wise investment.

5. Communicate With Your Staff

Most of the time, the buyer wants to see the staff stay. Make sure your team is onboard with your decision. Communicate to them how they stand to benefit from the sale. Would it mean higher compensation, better benefits, increased vacations, job security, growth opportunities with a larger company and other possible perks?

6. Get Your Ducks in a Row

Prepare for due diligence. During this stage, the buyer’s representatives review the paperwork you provided: financials, contracts with clients, employees, customer databases, assets, intellectual property, outstanding short- and long-term debts, pending legal issues, office leases and all essential documents related to the business. Hopefully, you have a sound record-keeping system in place in preparation for this stage.

7. Bring In an Experienced Advisor

One of the most important professionals you must bring onboard is an experienced business broker/advisor who can understand your needs, look out for your interests and share some value-enhancing strategies. Unless you’re a serial entrepreneur, there’s no way you can learn all the nuances of the selling process along with managing your business’s day-to-day activities. Financial records are vital, but the preparation phase goes beyond that, starting with an NDA (nondisclosure agreement). The selling process can be lengthy and arduous. It can be psychologically and physically draining. An experienced broker should help you and the buyer focus on the task without being derailed by disagreements, personal feelings, emotions and unpleasantries that are bound to take place during this lengthy and drawn-out process. With your assistance, the advisor will create a compelling business overview/proposal for potential buyers. Their knowledge of the industry, the network of potential strategic buyers and others within and outside the industry, and the ability to market your company determines the quality of offers you receive.

8. Discuss Terms With Potential Buyers

This includes purchase price and payment structure – lump sum payment, earnout, seller financing or combination thereof – non-compete agreements and transition arrangements. The nature of your exit should also be discussed – whether it’s a complete exit, phased exit, staying onboard for the pre-negotiated duration, family succession or employee stock ownership plan. Make sure to set a realistic valuation for your company. And no matter how eager you are to exit and move on to the next phase of your life, don’t make the mistake of accepting the first offer you receive. Don’t make the buyers feel that you’re eager to sell. Evaluate all the offers carefully and meticulously. Create a bidding situation among the bidders to receive the best possible deal.

9. Develop & Manage the Transition Process

Doing this will ensure a smooth handover. Be sure to pass on detailed procedure and systems operations manuals. Introduce the buyer to your team, key customers and suppliers. Train and guide the buyer on critical customer interactions and their “hot buttons” to make the customers feel they are in good hands with the new owners.

To conclude, having a written plan and implementing a comprehensive exit strategy can multiply your upside and accomplish the set goals in all aspects important to you – personal, business, financial, family and legacy.