business exit strategy planning

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Exit Planning Explained - Process, Strategy, and More

If you are a business owner, you may have wondered what will happen to your business when you decide to retire, sell, or transfer it.

How will you ensure you get the best value while exiting the business? How will you protect the interests of your family, employees, customers, and other stakeholders?

In this guide, we will explain the exit planning process, the different types of exit strategies, and the role of advisors in the exit planning process. We will also provide tips and best practices for creating and executing a successful exit plan.

You may also want to look at a few success stories from our past clients for some inspiration before you start reading.

What is Exit Planning?

Exit planning is the process of preparing for the eventual transfer or sale of a business while considering the owner's personal and financial goals. It involves implementing various decisions and actions that enable a smooth and organized exit.

Exit planning is not a one-time event but a dynamic process that adapts to the business owner's and business's changing needs and circumstances. It requires a clear vision, proper assessment, and a strategic approach.

What Are The Benefits of Exit Planning?

Exit planning can benefit the business seller in many ways, from safeguarding their interests to facilitating a smooth deal when the time comes.

By planning ahead, the owner can increase the attractiveness and profitability of the business and reduce the risks and liabilities that may lower the business's value . The owner can also optimize the timing and structure of the exit and take advantage of the tax incentives and exemptions that may apply.

Business owners can ensure that their personal and financial goals are aligned with the goals and vision of the business and that they have a clear and realistic roadmap for achieving them.

One can anticipate and mitigate the potential challenges and obstacles that may arise during the exit process, such as legal disputes, regulatory issues, and emotional stress. They can also prepare for the transition and the future by securing their income, assets, and lifestyle and exploring new opportunities.

The owner can ensure the continuity and stability of the business by developing and retaining key employees and managers and transferring the knowledge and skills essential for the new ownership's success.

One can achieve a sense of accomplishment by exiting the business on their terms and conditions. The owner can also enjoy a smooth, stress-free exit and a rewarding and satisfying future.

Whether you are planning to exit your business in the near or distant future, exit planning is a vital step you should consider.

TL;DR - Overview of the Exit Planning Process

Exit planning is the process of preparing for the eventual transfer or sale of a business. It can be a planned event or arise from a contingency where a business owner wants to change ownership for some reason.

Developing a good exit plan that covers factors like tax compliance and stakeholder share is crucial, and a good M&A advisor can help both parties build terms and negotiate a fair deal.

What Role Do Advisors Play in the Exit Planning Process?

Rightly known as Certified Exit Planning Advisors, these professionals can provide expert advice and guidance to the business owner during exit planning. They can help the owner with various aspects of the exit planning process, such as:

Assessing the current situation and identifying the objectives and preferences of the owner

Exploring and evaluating the different exit strategies and options

Developing and implementing a customized and comprehensive exit plan that meets the needs and expectations of the owner

Coordinating with other advisors and stakeholders involved in the exit process

Monitoring and adjusting the exit plan as needed to respond to changing circumstances and opportunities

Exit planning advisors often work with a team of other professional who help in the process, who may include:

Accountants: They can help the owner with the financial and tax aspects of the exit, such as valuing the business, structuring the deal, minimizing the taxes and fees, and preparing the financial statements and reports.

Lawyers: Lawyers can help the owner with the legal aspects of the exit, such as drafting and reviewing the contracts and agreements, protecting the intellectual property and confidential information, resolving disputes and claims, and complying with the laws and regulations.

Brokers: They help with the marketing and selling aspects of the exit, such as finding and qualifying the potential buyers, negotiating the terms and conditions, facilitating the due diligence and closing, and maximizing the price and value.

Bankers: Bankers can help the party with the financing and funding aspects of the exit, such as securing the loans and equity or arranging escrow.

Consultants: They can help the owner with the strategic and operational aspects of the exit, such as improving the business's performance and sustainability.

Advisors can play a vital role in the exit planning process, providing the owner with the knowledge, skills, and resources necessary for a successful and satisfying exit. The owner should pick suitable advisors, maintain control and responsibility over the exit planning process, and make the best decisions for themselves and their business.

Exitwise can help you find the right advisors for your exit planning and build the right M&A team for a successful team. Check out our detailed explanation of how our process works and how we can help create your dream M&A team.

5 Key Steps in Developing an Exit Plan

Developing an exit plan helps you achieve your personal and financial goals and ensure a smooth and successful exit from your business.

Here are five key steps that you should follow to create and execute an effective exit plan:

Step 1: Establish Your Objectives

Identify your reasons and motivations for exiting the business and your desired outcomes and benefits. Consider your personal, financial, and professional goals and your family, lifestyle, and succession preferences.

Step 2: Determine the Value of Your Business

Estimate your business's current and potential value based on various valuation methods and market factors. Identify your business's value drivers, detractors, and the opportunities and threats that may affect the value. You can use our business valuation calculator for an accessible overview of your business's current value.

Step 3: Choose Your Exit Strategy

Explore and evaluate the different exit strategies and options available, such as selling, merging, passing, or liquidating the business. Weigh the pros and cons of each option and select the one that best suits your objectives, situation, and market conditions.

Step 4: Develop Your Exit Plan

Create and implement a comprehensive and customized exit plan outlining the specific actions and initiatives needed to execute your chosen strategy. Include a contingency plan, a timeline, and a budget for prompt execution.

Step 5: Execute Your Exit Plan

Execute your exit plan with the help of an exit planning advisor to ensure maximum compliance and value. Monitor and adjust your exit plan to respond to changing circumstances and opportunities and ensure success and satisfaction.

8 Exit Planning Strategies Explained

Check out these different exit strategies, and you may get an idea of what best suits your business.

1. Employee Stock Ownership Plan (ESOP)

A strategy where the owner sells some or all of their shares to a trust set up for the benefit of the employees. The employees become the business owners, and the owner receives cash and tax benefits. This strategy can be used to reward and motivate the employees and preserve the business's culture and legacy.

2. Merger with Another Business

In this arrangement, the owner combines their business with another business with complementary or synergistic assets, capabilities, or markets. The owner receives shares or cash from the merged entity and may retain some control or influence over the business. This strategy can create value for both parties and increase the chances of success in the future.

3. Management Buyout (MBO)

MBO is a strategy where the owner sells their business to the existing management team, who may use debt or equity financing to fund the purchase. The owner receives cash and may retain some equity or involvement in the business. This strategy can be used to transfer the ownership to the people who know the business best and to ensure continuity and stability.

4. Initial Public Offering (IPO)

IPO is a strategy where the owner sells some or all of their shares to the public through a stock exchange. The owner receives cash and may retain some ownership or control over the business. IPO strategy can raise capital and enhance the business's reputation and visibility.

5. Selling to a Third Party

Here, the owner sells their business to an external buyer, an individual, a group, or a company. The owner receives cash and may negotiate the terms and conditions of the sale. This strategy can be used to maximize the business's price and value and exit the business quickly and thoroughly.

6. Family Succession

The business owner transfers the ownership or control of the business to their family members, who may be their children, siblings, or relatives. The owner may receive cash, shares, or other assets from the family and maintain some involvement or influence in the business. This strategy can be used to preserve the business's legacy and culture and maintain ownership in the family.

7. Recapitalization

It is a strategy where the owner restructures the business's capital structure by changing the mix of debt and equity. The owner may use the debt or equity issuance proceeds to pay themselves a dividend or reinvest in the business. This strategy can increase the return on equity and prepare the company for a future exit.

8. Liquidation

In liquidation, the owner sells the assets and liabilities of the business and distributes the proceeds to themselves and other stakeholders. The owner may receive cash or other assets and terminate business operations. This strategy can be used when the business is no longer viable or profitable or when the owner wants to retire or pursue other interests.

What Are the Tax Implications of Different Exit Strategies?

Disclaimer: The information provided here is for general guidance only and does not constitute professional tax advice. You must consult a local tax professional before making any final decisions regarding tax matters.

The tax implications of different exit strategies can vary depending on the structure of your business, the nature of your exit, and the applicable tax laws. Here are some common exit strategies and their tax considerations:

Selling the Business

Selling your business can lead to capital gains and regular income taxes. Depending on how long you've held the business, capital gains may be classified as short-term or long-term, each with its tax rate. Additionally, you might be subject to depreciation recapture taxes if you've claimed depreciation deductions on your business assets.

Passing the Business to Heirs

Succession planning involves passing on your business to family members or other heirs. While this strategy can potentially lead to estate taxes, the tax implications can be minimized through careful planning, including using trusts and gifting strategies.

Liquidating the business

Closing down your business involves liquidating its assets and settling its liabilities. This process can trigger capital gains, ordinary income taxes, and potential taxes on any accumulated earnings in the business.

Merging or Acquiring

Mergers and acquisitions can lead to a range of tax implications, including taxes on gains from the sale of assets or stock, changes in ownership structures, and potential changes in tax attributes like net operating losses.

Exit Planning Statistics

Let’s look at some exciting findings from recent surveys and reports on exit planning statistics:

According to the BEI 2022 Business Owner Survey , 16% of business owners plan to exit their businesses in fewer than five years, 37% plan to exit within 5–10 years, and 47% plan to exit in more than ten years. When asked how the COVID-19 pandemic impacted their plans to exit, more than 50% said it made no impact. Only 11% said it made them want to exit their business sooner.

The EPI 2023 State of Owner Readiness Research report says that 52% of business owners include written detailed personal planning in their exit strategy, compared to only 9% in previous surveys. This indicates that owners consider exit planning earlier in their ownership lifecycle and expect their advisors to support those efforts.

Data from the Gitnux 2024 Succession Planning Statistics estimates that only 30% of small businesses successfully sell, leaving 70% without a buyer or successful plan for what happens next. The report also suggests that owners with a formal succession plan are more likely to achieve higher business value, lower taxes, and greater personal satisfaction.

Frequently Asked Questions (FAQs)

This comprehensive FAQ section will guide you through the answers to some common questions about exit planning.

When Should an Owner Start the Exit Planning Process?

Owners may have different objectives, timelines, intentions, and market conditions for their exit. However, a general rule of thumb is to start the exit planning process at least 3 to 5 years before the desired exit date. It allows enough time to assess the current situation, explore the options, develop and implement the plan, and execute the exit strategy. Starting the exit planning process early also helps increase the business value and reduce the risks and uncertainties.

How Does Exit Planning Affect Business Valuation?

Exit planning can positively impact the business valuation, as it can motivate the ownership to improve the business's performance and sustainability and enhance its attractiveness and profitability for potential buyers or investors. Exit planning can also optimize the exit's timing and structure and take advantage of the tax incentives and exemptions that may apply.

Can Exit Planning Help in Reducing Business Risks?

Exit planning can help reduce business risks, as it can help anticipate and mitigate the potential challenges that may arise during the exit process, such as legal and regulatory issues, market fluctuations, and operational disruptions.

Exit planning is a vital process for any business owner who wants to maximize the value of their business and achieve the best potential deal for their exit. There are various benefits of exit planning and several strategies to carry it out. It all depends upon the buyer's and seller's preferences and objectives.

Let us help you with your exit plan if you need more assistance. We will help you create a team of experienced and professional M&A advisors who can guide you through every step of the exit planning process. Contact us now to schedule a consultation .

Brian graduated from Michigan Technological University with a BS in Mechanical Engineering and as Captain of the Men's Basketball Team. After a four-year stint at Deloitte Consulting, Brian returned to school to get his MBA at the University of Michigan. Brian went on to join his first startup, a Ford Motor Company Joint Venture, and cofound a technology and digital marketing services agency. Through those experiences, Brian embraced the opportunity to provide M&A education and support to his fellow business owners as they navigated their own entrepreneurial journeys.

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Business Exit Strategy Planning

Written by Dave Lavinsky

This guide to planning your exit strategy is the result of Growthink’s 20+ years of experience helping companies develop successful exit plans.

The guide starts by explaining what a business exit strategy is. It then explains the types of exit strategies available to your business.

It then discusses the key takeaways to successful exit strategy planning. In this section, we spend a significant amount of time going through the 20 ways to maximize the value of your company to realize a successful exit.

Finally, this guide provides helpful tips regarding how to create an exit strategy business plan for your organization.

What is a Business Exit Strategy?

A business exit strategy is a plan that an owner or executive creates and follows to liquidate their stake in a business, ideally at a substantial profit.

A successful business exit strategy requires careful planning and should be periodically revised to best reflect the current business conditions.

Types of Common Exit Strategies

To ultimately build an effective exit plan it’s important to understand the ways you can exit a business and which type of exit aligns with your business goals and values.

For example, if your end goal is generating money and personal wealth, then selling your business to a competitor or a private equity group might be a viable exit plan. However, if you are more attached to your business’ legacy and wish to see it operational even after your exit, then selling to current skilled employees or family member succession planning might be business exit strategies worth exploring.

Below are the six core types of exit strategies, organized into two core categories: Selling Your Business and Other Business Exit Strategies.

Selling Your Business

There are three main audiences to consider when selling your business: another business, a financial group, and employees. When evaluating the sale, gauge the attractiveness of your business from the perspective of potential buyers or other investors.

A solid reputation, customer base, and track record of growth are some factors that make a business appealing to buyers. Other factors could include strong cash flow, patented intellectual property, or niche expertise. Note that these factors are discussed in the “Keys to Successful Exit Strategy Planning” section later in this guide.

Another Business (or a Strategic Buyer) : Businesses acquire other businesses for a variety of reasons. From a buyer’s perspective, a strategic acquisition is often the quickest way to grow and/or diversify a business. It is also a surefire way to eliminate competition. For these reasons, valuations in strategic acquisitions are often highest. The drawback to this path is that most companies do not have an active mandate to acquire another business. A business owner may first need to be convinced of the idea of an acquisition exit strategy generally before entertaining the specific opportunity to purchase your business. He or she may then need to obtain financing to complete a transaction. Both of these elements can slow your exit process.

Therefore, when exploring this path it is important to plan ahead and identify firms that could be potential acquirers by keeping up with transaction activity in the same industry. Keep a lookout for firms that are actively buying other businesses and position your business in a way that appeals most to them. This will maximize your chances of receiving an enviable acquisition offer from a larger business that is prepared to buy.

Financial Buyer : A financial buyer refers to an individual or group, like a private equity firm, who is primarily interested in the cash flows your business can generate post-acquisition. Financial buyers’ sole activity is the buying and selling of businesses, so these buyers are prepared to efficiently and effectively evaluate a business and have capital in place to quickly execute a transaction. Given their valuation approach and goal of future cash flows, financial buyers are typically looking for relatively high historical operating profits ($3 million at a minimum). Typically private equity groups value a company based largely, if not exclusively, on a multiple of past operating profits. These multiples may or may not take into consideration the growth opportunities you see for your business and so you may not see the same valuation as a strategic buyer.

Your Employees : Selling the business to employees is another business exit strategy to consider. The advantage of this employee or management buyout strategy is that you are transitioning to people who are well-versed in the business and have a vested interest to see it thrive. If you are structured as a corporation, you can create an Employee Stock Option Plan (ESOP), which allows employees to vest ownership in your business. When you are ready to exit, the larger business then purchases your shares from you and redistributes them to the remaining employees. A similar option is establishing a worker-owned cooperative. In this scenario, employees invest personal capital into shares of the cooperative. For this to work, it is essential that you foster a participatory culture in your organization and be mentally prepared to stay on until the transition is complete.

Other Business Exit Strategies

If you do not plan to sell your business, the following are other exit strategies to consider.

Family Succession : This business exit strategy involves transferring the mantle of leadership to the next generation in your family. This common exit strategy is popular with owners who wish to see their legacy continue. The advantages of family succession include the ability to choose a successor of your choice and groom them. It also allows for the sole business owner to remain involved. The success of this exit strategy often hinges on the personal attributes and professional skills of the new successor. Their commitment to the family business and the quality of their relationships with other employees are also critical factors.

Asset Sale : This business exit strategy involves shutting down the entire business and selling some or all its assets. For this exit strategy to be profitable the business needs to have certain value-adding assets it can sell, such as land, building(s), or equipment.

Compared to a stock sale, asset sales typically involve limited negotiations. You also do not have to worry about the transfer and transition of the business ownership. The negative obviously is the loss of the business you built.

Taking Your Business Public : Another company exit strategy you may consider is an Initial Public Offering (IPO). We mention this last since it’s only relevant to a tiny portion of companies. An IPO involves selling your business in public markets like the New York Stock Exchange (NYSE). IPOs receive wide media coverage but are not very common. This is because they are very expensive and laborious to undertake. Every IPO requires thorough financial, operational, and staffing reports among others which can be very costly to produce. Incurring such costs is not feasible for small to medium-sized businesses; hence this exit strategy is not practical for many organizations. If you do manage an IPO then the pros are instant popularity as IPOs are usually quite a hyped event. You might even get lucky and have your business valued highly on the stock market leading to your stock value appreciating exponentially.

What’s the Best Exit Strategy?

There is no single best or preferred exit strategy. The ideal choice for your business depends on your unique circumstances.

Your Business Goals : You need to assess how ready you are to give up control of the business and when you want to exit. This is a personal decision but consider this: if you have been running the business solo or with a very small team, then an initial public offering (IPO) or selling to a larger business may not be the best option.

Your Business Size and Structure : Another key consideration is your company size and structure. If you are a small business, then an asset sale or family member succession might be the more feasible option for you. On the other hand, if you are a corporation with tens or hundreds of employees, then going public is a more viable option.

Your Business Age and Stage : The next thing you need to consider is your company’s age and stage. If your business is young and growing, then you might want to consider an IPO as your exit strategy. However, if your business is in its maturity stage or even in decline, then an asset sale or family succession might be more suitable.

The Bottom Line

No one can tell you what the best exit strategy is for your business. The key is to weigh all the options and make a decision that aligns with your personal and professional goals for a successful future.

Keys to Successful Exit Strategy Planning

The key to successful business exit planning involves just two steps: 1) determining how strategic or financial buyers will value your business, and 2) maximizing that value.

Determining How Your Business Will/Might Be Valued

As discussed above, if you seek a financial buyer, they will value your business based on your company’s financials, cash flow, and future growth prospects.

Strategic buyers, which nearly always pay more money than financial buyers, and thus should generally be your focus, will value your business differently.

The best way to identify how they will value your business is to:

Research acquisitions in your market (via trade journals, Google searches, etc.)
Determine exactly what metrics will you be primarily valued on? Ideally in your searches, you will see what attributes were mentioned in articles discussing the acquisitions. Did they mention the acquired company’s revenues, # of subscribers/customers, market share, EBITDA? Whatever metrics are mentioned will be key-value drives.
Identify factors multiple strategic buyers would value, such as new products, a distribution network, intellectual property (IP), unique location(s), financial savings, better systems/processes, permits, etc. These factors are discussed in more detail in the next section.

Maximize the Value of Your Business

To help in your business exit planning, we have identified 20 ways to build and maximize the value of your business. Each of these concepts is discussed in detail below.

1. Build Synergistic Value

Synergistic value is when you and an acquiring company together have more value than the two separate companies.

So how might you create synergy? Perhaps your products or services could be sold to the acquiring company’s large customer base?

For example, maybe the acquiring business sells parts to bicycle stores and you have a new part that is also sold to bicycle stores. But perhaps they sell to 5,000 bicycle stores and you only sell to 500.

By getting your part into the additional 4,500 stores, they may be able to increase your sales tenfold. That’s huge synergy.

There are many other areas of potential synergy. Perhaps you have a unique core competency that can be leveraged by the acquiring business. Maybe you’re an incredible Internet marketer and the company that wants to acquire you is not great at internet marketing. And by leveraging your unique marketing skills they could dramatically grow their business.

So think through the synergy fit. Think through what companies might want to buy you at some point and what synergistic value you could bring to that organization.

2. Diversify & Lock Down Your Customer Base

The next thing you can do to maximize the value of your business is to diversify and lock down your customer base.

There’s a threat to your company’s value when you have a concentrated customer base, which is few customers or customers representing 5%, 10%, or more of your sales. That is risky because if one of your bigger customers or multiple big customers leave, your sales and profits could drop precipitously.

Another big risk is when customers have personal relations with the owner because you (the owner) would be lost after the acquisition. Or if customers have personal relationships that are too strong with a salesperson and that salesperson leaves your business and the customer leaves us with them.

So what are the solutions to these threats?

First, diversify your customer base. You need to be thinking about diversifying your customer base so that you don’t have the risk of a big customer or more leaving.

Secondly, if possible, secure contractual sale agreements such as long-term contracts and licenses to ensure ongoing sales from customers. The idea here (and lowest risk to buyers) is contractually recurring revenues.

3. Diversify Vendors

The third thing you want to do to maximize the value of your business is to diversify your vendors. Consider what would happen if a key vendor raises its prices or goes out of business. Would your business be in trouble?

Acquirers are going to ask what happens if something happens to one of your vendors. Likewise, you need to be asking this question of your business right now.

So what are the solutions?

Finding and using multiple vendors. Importantly, you’re probably not going to generate more revenue tomorrow because you spend hours looking for multiple vendors. But it’s going to make your business stronger. It’s going to remove risk from your business and make it more valuable to acquirers.

4. Put “Successor” Clauses in Customer (and Partner, Vendor/Supplier, etc.) Contracts

The next way to maximize your value is to put successor clauses in your customer, partner, and vendor contracts.

Successor clauses ensure that your key contracts survive significant changes in ownership so the buyer receives full value from them. Many contracts become void if your business transfers ownership and you obviously don’t want that. So when you sign contracts with customers, vendors, partners, etc., make sure you have clauses that the contract survives the acquisition of your company. If not, this could significantly reduce the value of your business.

5. Bolster Your Senior Management Team

The next way to maximize the value of your business is to bolster your senior management. You need to make sure your business can run without you because then there’s less risk to the buyer.

Doing this also means that you might need to stay with the business for less time after you sell it. To bolster your senior team, and make sure that you’ve hired and trained quality people that can run the business for you.

6. Bolster Your Middle Management Team

The next thing to boost value is to bolster your middle management team. Once again, you need more trained people so the business can run without you. This lessens the risk to a buyer.

Having trained middle management will help ensure a smooth transition to the new owner. There’s always going to be a transition period where you’re integrating your business with the acquirers. The more trained staff you have makes it much easier for the acquirer to buy your business and have the business run as usual from the get-go.

7. Build Management Team Solidarity

The next value-building strategy is to build management team solidarity on a day-to-day basis. To succeed with the day-to-day business operations, your team must have the same business vision and financial goals as you.

During the sales process to an acquirer, the same holds true. This is because buyers will interview your team members individually during the due diligence phase to make sure there is a cohesive vision/direction among your key employees.

8. Improve the Quality of Your Team

Will acquiring your team add significant value to the buyer? How unique is your team? And do you have unique talents?

As you can imagine from these questions, your team can add a lot of value to your company.

To begin, if your team has unique technical capabilities, great customer service people, etc., it could have great value to an acquirer. Likewise, it’s extremely valuable if your team have a track record or ability to do things really well on an ongoing basis, such as:

Conduct R&D to come up with new products
Bring new products to market
Provide exceptional customer service

So, think about what your team is great at, and work to make them even better.

9. Build Brand Value

The next way to maximize the value of your company is to build your brand. The value of your brand and your reputation can be considerable. A well-known brand results in recognition which often equals sales for the foreseeable future.

So building your brand gives you a lot of recognition, which has a lot of value. Building your brand also gives you trust. This is why a lot of brands are acquired.

So think about the value of your brand. How can you build your brand to make it more well-known?

10. Build Intellectual Property

Intellectual Property (IP) can provide significant value. IP includes your patents, processes, copyrights, trademarks and service marks, and trade secrets.

Sometimes your IP value can represent the entire purchase price of your business.

Think about intellectual property and how you use that IP to create real value for your company. And ideally how it can provide even more value to an acquirer.

11. Improve Your Culture

The next way to build value is through your culture.

Zappos is a great example of a company that built a great culture. And as a result, Amazon acquired it for over a billion dollars.

So you think about how you can build a great company culture that allows you to build a solid company and be acquired for a lot of money. Importantly, Zappos’ culture became a threat to Amazon and Amazon purchased the company because of this threat.

So consider this question: can your culture positively “infect” the culture of an acquirer?

It’s one thing to build a great culture but think about if you can create a great culture that when acquired, is so great and strong that you can “infect” the larger company that buys you with it. That’s a great way to build value.

12. Build Back-Office Infrastructure

You can also build value through your back-office infrastructure.

Your back-office infrastructure includes all the departments that support your revenue-generating areas, such as IT, human resources, accounting, legal, etc. A solid back-office ensures your business continues to run smoothly without you and after an acquisition.

This is really important to financial buyers because financial buyers want to see your business grow as a standalone business. They’re looking to acquire your business, grow it for four to eight years, and then sell it.

A strong back-office infrastructure can also be important for strategic buyers. They will care if you have a strategic or competitive advantage in any of these back-office areas. If not, they’re going to dissolve or integrate your back office into their own departments.

13. Build Revenues, Subscribers/Customers &/or EBITDA

Building revenue streams, subscribers, customers, and/or EBITDA is an obvious way to really build value in your company.

Subscribers and customers are assets that are highly valued and bring future sales and maximize profits.

And revenue and EBITDA are key financial measures that show your success and can be used to estimate the price at which acquirers might purchase your company.

14. Acquire Great Locations

Another way to maximize your value. Is by making sure your location(s) is/are very strong.

By locking up the right locations, you can add a lot of value to your organization.

For example, Rosetta Stone has kiosk lease agreements at airports throughout the world. That’s really valuable…if an acquirer wanted to buy Rosetta Stone, they would instantly gain visibility in airports throughout the world.

Likewise, when FedEx purchased Kinko’s, it instantly gained hundreds of well-placed retail locations.

15. Build Your Distribution Network

Another way to maximize value is through your distribution network.

Distributors, resellers, and/or affiliates are individuals and organizations that sell their products and services for you. That’s a huge asset that can maximize your revenues and profits, and which could do the same for your acquirer.

So, the question to ask yourself is: what can you do to gain a large distribution network that will increase your revenues and make you a more attractive acquisition target?

16. Improve Your Product/Service Portfolio

The next way to really build value in your business is to focus on your product and service portfolio.

Think about the products and services you currently offer. Are they unique? Can they be leveraged by an acquirer? Do they represent a threat to an acquirer’s business?

Think about what new products and or services you can build to develop value. More products generally equal more revenues, more customers, more intellectual property, and less vulnerability.

The more products you have, the more you could cross-sell your current customers, upsell them, and the less vulnerable you’d be to a competitor who launches a similar product to yours.

17. Show Financial Savings

The next way to maximize value is through financial savings. Do you have economies of scale in certain areas? Do you do things so often that you’re able to get your costs down on a per-unit basis? If so, such cost savings could be valuable to an acquirer.

18. Create Systems & Processes

Likewise, do you have any processes, systems and ways and ways of doing business that save money? These will all be valuable to your current business and to acquirers.

Likewise, systems and processes can add tremendous value to your business right away. And quality systems and processes are valuable assets. They allow you to perform with precision and consistency. They allow you to perform at lower costs and gain efficiencies and allows you to quickly and easily train and integrate new team members.

So focus on building quality systems and processes.

19. Create a Great Website

Your website can also be a source of value maximization too.

Not only might your website, based on your brand, attract visitors. But, if you’ve invested in SEO or search engine optimization, you might organically rank for many keywords. If your site is SEO optimized, an acquirer might be able to use it to rank for additional keywords that have significant value to them.

So it’s worth building a great website and optimizing it for search engines.

20. Achieving Government Hurdles

Achieving/overcoming government hurdles can add significant value to your business. Getting permits, zoning approval licenses, regulatory approvals, and certifications can be extremely valuable in the short-term to your business, but also really valuable to an acquirer.

Doubling the Value of Your Company

Doing everything listed above can exponentially increase the value of your business. In addition, you can literally double the value/purchase price of your company by expertly executing the sales transaction:

Presentation : how you position your company and support your valuation
Professional sales process : getting more buyers, revealing information at the right times, etc.
Negotiating and closing skills : getting the right deal done

Creating Your Exit Strategy Business Plan

The process of creating your exit strategy business plan includes the following:

1. Create a List of Potential Acquirers

If you are interested in being acquired at some point in the future, identify companies you think would be ideal.

2. Determine How You Will/Might Be Valued

Go through the 20 value maximization concepts presented above and identify which of them would be most valuable to each potential acquirer.

3. Create Your Strategic Plan

In your strategic plan, identify each of the ways you will build value (e.g., develop new systems).

Document the timeline for creating each new asset along with the financial requirements and the staff members who will lead each initiative.

How Growthink Can Help

These concepts should help you think about how your brand can be more valuable to potential acquirers. The goal is not only to attract them but also to convert casual visitors into sales. Achieving these goals will make it easier for you to get out of the rat race and finally achieve success as an entrepreneur or business owner. If this all sounds complicated and overwhelming, we’re here to help!

You can get started today on your exit strategy using our Ultimate Business Plan Template to help you create a business plan if you are seeking funding. If you don’t need outside funding to execute your exit plan, use our Ultimate Strategic Plan Template .

Our team of experts is also ready to help! At Growthink, we specialize in helping entrepreneurs grow their businesses through expert advice on business models, business plans & strategy, financial planning, and exit strategy and valuation services. Contact us today to learn more.