Exit Planning – Success Strategies to Maximize Business Value


As a business owner, the exit of your business will most likely be the single largest transaction you will ever have to navigate. Successful businesses do not build themselves, and chances are, you have spent a considerable amount of time and energy growing yours over the course of your life; you are proud of what you have built. The exit of your business is a major milestone in your life whether you are headed into retirement or to the next new adventure. As you prepare for this pivotal transaction, there are steps that can be taken to maximize the return on your investment of time, energy, and money – and increase the rewards from an exit.


Many business owners underestimate the preparation required to optimize the value of their business. The result of taking the preparation process lightly can be a substantially discounted purchase price, or worse, the loss of a deal.


In every business, regardless of the industry, there are distinguishable variables that drive value. These variables can increase marketability, and transaction price. The key to achieving maximum return on your business is to pinpoint these value drivers and effectively manage them towards a defined target.


There are three important steps to capturing maximum trade value:


  1. Business valuation/assessment


  1. Strategic business planning


  1. Customized transaction management


  1. Business valuation/assessment: An independent valuation by a Certified Valuation Analyst is an important starting point when approaching an exit. Fundamentally, to manage anything you must measure it, and to monitor progress you must have a starting place. A non-biased third-party valuation on your business provides a foundation to work from and a reference point for achievement. A valuation can be conducted for a nominal cost relative to the return it will produce by providing clarity and direction in the preparation process. The business assessment process should involve the identification of key factors that are driving value to your business and a review of potential factors that could be causing a discount in value.


  1. Strategic business planning: Developing a strategy to leverage defined value drivers and operational strengths, while improving select areas identified as business value discount factors, can be done in an effective manner when planned for properly. For example, factors such as customer/client concentration, leadership team, contract management, and financial performance ratios compared to peer companies can have significant impact on the market appeal and value of your business.


  1. Transaction Management: Unlike other common assets like houses and cars, the marketing process for a business is a much more involved. Confidentiality is a crucial element in the process to maintain stability. A seasoned transaction advisor should research the industry/market and develop a target buyer profile. Creating a market around your business with qualified buyers ensures it will be presented to prospects that understand the strategic value and are willing to pay a premium for it. During the transaction preparation process, assembling company information in a clean, professional format – highlighting select value drivers will reinforce the credibility of company performance and bring attention to factors that can improve the value proposition.  While this process is very important, it is also important that you stay focused on the business and avoid distractions. Surrounding yourself with an experienced transaction management team will keep you insulated from time-consuming information gathering and potential buyer interactions.


To get the most out of your business it is important to start exit planning before you are expecting to sell. Beginning with a baseline value and developing a plan to prepare should ideally begin 3-5 years in advance of a desired exit date, but preferably later than one year in advance; the more time the better. Taking the preparation process lightly can result in considerable unrealized value.


DLA provides a full-service approach to exit planning and transaction execution. From valuation to the closing table, DLA has a team that will ensure you maximize your return. Carrying experience from over 200 transactions, DLA is passionate about helping business owners navigate this chapter in their life effectively. Contact us today and earn the peace of mind that you finished strong and maximized the returns from your investment.