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5 tips for a confidential exit strategy for business owners

A confidential exit strategy makes your business attractive to potential buyers, but it also gives you an overview of improvement opportunities and certainty about your own future. Read here why you should have an exit strategy even if you don't want to sell yet. And get 5 tips on how to go about it.

Without an exit strategy, you could miss out on opportunities

You know you're going to leave your business one day, but have you planned how and when? Do you know the value of your business and have you protected your key assets and updated your processes so you're ready if a serious inquiry comes tomorrow?

Only about half of all business owners have an exit strategy. The rest are unprepared for sudden buyer inquiries, illness, or other factors that may trigger an urgent need or opportunity to sell. Business Broker advised on generational succession over 200 business transactions.

"We regularly meet business owners who have neglected to have an exit strategy and do not know what their business is actually worth. Exit strategy and valuation are therefore some of the first things we advise on," says Claus Bruun Rasmussen, partner at Business Broker. Claus Bruun .

At best, a late exit strategy means rushed efforts to mature the business for sale. At worst, an unprepared exit can mean that the owner

Missing out on good timing in the market
lose influence over who to buy
gets less for the company than it's actually worth, as the value is not competed in a structured sales process.

"No one knows when a unique opportunity will arise. That's why we recommend that all business owners have an exit strategy ready, so that the business is attractive to potential buyers at all times," points out Claus Bruun .

Business Broker on confidential exit strategy for business owners

Exit strategy and valuation provide overview and certainty

The exit strategy differs from a planned generational succession in that it is more timeless. A generational succession be planned 4-5 years before you want to leave the company.

An exit strategy not only allows the business owner to get the most out of a sale. It also provides an overview of the business and any potential for improvement. At the same time, it keeps an eye on the opportunities that a full or partial sale can open up. For example, in terms of business development and synergies.

"There are also advantages to knowing the realistic market value of the company, so that the owner can be certain about their own future and any opportunities to invest time and money in new activities," adds Claus Bruun .

Several reasons why business owners hesitate with exit strategy

Business Broker several explanations as to why the owner does not have an exit strategy. Typically, the excuse is that there are no current plans to sell, or that there has not been time to develop a strategy for a sale.

"It can be difficult to talk about exit strategies. Most business owners have a lot of thoughts about it, but don't really dare to talk to anyone about it. They may be unsure about the signal it might send to those around them if word gets out that they are talking about an exit. It can also be difficult to realize that your time as an owner-manager will not last forever," explains Claus Bruun .

In this case, it may be beneficial if a trusted advisor dares to raise the issue. Another option is to seek out an external advisor or sparring partner with special knowledge of the market for business transactions. Business Broker always Business Broker a non-binding and confidential consultation on exit strategies.

5 tips for a confidential and robust exit strategy

An exit strategy contains several different elements. Basically, it's about ensuring that all processes are up to date, assets are protected, and that there is documentation of the conditions in the company that affect the value. Knowing the value of the business is also an important part of the exit strategy. Here are 5 tips to follow when creating your exit strategy:

1. Start early - plan before the need arises

It takes time to build a good exit strategy and it can take time before the market is ready to buy. Get clear on what you want to achieve with a sale and what role you want to play/not play in the company after the sale. Time allows you to build and optimize the value of the business and ensure that both financial and legal matters are in order when an offer is made.

2. Update your company values and processes

Make sure the company's values are up to date and that processes are well-functioning and can run without your presence. This both increases value and makes the company attractive to potential buyers.

3. Conduct a professional valuation

A serious valuation creates a realistic picture of the company's market value. The valuation is based on an analysis of internal conditions in the company and external industry-specific conditions such as economic trends and required rates of return compared to the demand among potential buyers. It is beneficial to ally yourself with a professional business broker who knows the market. The process can reveal strengths and weaknesses in the company's structure, finances and operations, which can inspire targeted actions to increase the company's value.

4. Protect key company assets

Identify and protect your company's most important assets, whether they are intellectual property rights, technologies, employees, or contracts. Get control of the documentation of everything from cash flows and key figures to environmental conditions, so you are well prepared for due diligence. due diligenceprocess that takes place during a change of ownership. Having these key assets secured and contractually in order is important in order to offer potential buyers a stable and valuable business.

5. Keep your exit strategy flexible

As market conditions, company finances and personal goals can change, the exit strategy should be flexible and adaptable. This allows the business owner to react quickly and efficiently to changes and ensure that the strategy is always in line with current opportunities and aspirations.

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Get external advice on exit strategy

There are probably several of the above issues that you can handle yourself in your company and that you will also benefit from in your day-to-day operations. However, it's rarely a good idea to develop the entire exit strategy on your own. Many owners lack knowledge about the demand among potential buyers and therefore don't know the realistic value of the business. It can also be difficult to know what to focus on and how to get the business ready for sale. Especially if you've never sold a business before.

"Most business owners we meet are uncertain about the value of their business. This is often because they are unaware of which investors may be interested in buying the business. In 80% of our transactions, we succeed in achieving a realized sale price that matches or exceeds the expectations that the owner and we had agreed upon in advance," says Claus Bruun .

Business Broker on many years of experience

At Business Broker , we Business Broker a team with diverse backgrounds and skills. What we have in common is that we all have many years of solid experience in selling medium-sized companies. We also have management experience at executive level, which enables us to quickly familiarize ourselves with the operational reality of the company. Based on this, we advise on all aspects of the exit strategy and ensure that no significant or critical areas are left unidentified and unaddressed. In connection with the exit strategy, Business Broker can Business Broker you Business Broker relevant knowledge about your company's