Selling your business is not a quick process. Oftentimes, business owners assume that selling a business can be done on the same timeline as selling a house. However, selling a home takes an average of three months, whereas selling your business starts a minimum of three years in advance. So, how should you be spending that time?
Business Exit Timeline
Exiting your business doesn’t solely consist of selling your business. There are multiple stages of exiting a business that start as far as seven years in advance. The business exit timeline can be described as the following stages:
- Exit Curious
- Exit Planning
- Exit Preparation
- Exit Launch
- Executed Letter of Intent
- Close the Deal
1,000 Day Exit Plan
While your exit may begin seven years prior to closing a deal, the final 1,000 days are the most critical time for your sale. There are numerous goals to achieve within the final three years.
1) Define Your Goals
Before you can truly start your exit plan, you need to define your goals, personally and financially. This is a good time to take a closer look at your business and define areas you’d like to improve and potential risks for future buyers.
2) Contact a Professional Advisor
No less than 18 months pre-acquisition, you should engage with a reputable M&A advisor. This ensures your advisor has the time needed to find interested buyers and help continue to improve your company.
3) Prepare for Market
This is a concentrated effort to ensure your financials, internal resources, and any marketing materials are ready for a buyer to investigate. Continue engaging with your M&A advisor and internal team to achieve this.
4) Conduct Due Diligence
Before selling your business, it is important to negotiate and conduct due diligence. It is key that you make sure the structure of the deal meets your expectations and needs before accepting it.
5) Close the Deal
At this stage, any documentation is completed, and the sale is officially finalized.
Conclusion
Exit planning is a complex process with a multitude of stages. If you’re an early planner who starts considering your plans years in advance or a spontaneous seller who wants to jump right into the mergers and acquisitions process, it takes time. The 1,000 days leading up to the final sale are integral to securing the results you want. Contact our team to speak to a reputable M&A advisor and begin your exit planning.
