Money Matters

Time to Exit Your Business? 10 Questions to Help Decide if You’re Ready to Sell

“Do I keep growing the business or is it time to exit?” This question was recently posed by a San Diego business owner who was contemplating his company’s fate as he neared his 60th birthday. He was no longer enjoying the grind of working daily, hated the changing business landscape, and started questioning why he continued going to the office every day. As business owners go through the process of accelerating the value of their business, preparing for a triggering event, and evaluating whether their business is ready to sell, they must ultimately decide: grow or exit? This is a question you should evaluate frequently and much earlier than retirement age.   

The Decision-Making Process

As part of the value acceleration methodology in Chris Snider’s book, Walking to Destiny, he suggests you revisit your decision to continue to grow or exit every 90 days. Reflecting on the decision frequently allows you to bring the choice into the present rather than depend on some distant future event. Your choice will then inform your actions, for example, whether you prioritize growing and adding value to the business or focusing on preparing to sell it.  

The difference between the decisions is significant. If you choose to grow, you’ll continue to invest in your business, which could mean taking on debt, adding employees, and making strategic decisions to accelerate its value. On the other hand, if you choose to sell, you’ll likely focus on limiting debt, taking fewer risks, and preserving what is already in place to position your business to sell. Either choice, however, is highly strategic in guiding where you’ll spend your time and energy. 

10 Questions to Consider

Many business owners who make this decision consciously every 90 days may become more invigorated in their efforts and want to accelerate the value of their business. However, those who decide to sell may find the path they thought they would take isn’t available or attractive as they explore their exit options. Here are 10 questions to help determine if you’re ready to sell:

  1. Do you understand the process it will take to transition your business and have you discussed it with stakeholders and loved ones?
  2. Have you aligned your personal, financial, and business goals to ensure the sale will be enough to cover your expenses and lifestyle?
  3. Do you have an advisory team? The team should include a CERTIFIED FINANCIAL PLANNERTM professional, an M&A attorney and estate planning attorney, a CPA, a banker or investment banker, board members, family, and other stakeholders. Other specialists may also need to be involved depending on your company or preferred approach.
  4. Do you have contingency plans for the 5 Ds (death, disability, divorce, disagreement, and distress) if you never see the entire business transition through?
  5. Do you have a current business valuation, personal plan, and financial plan?
  6. Have you reviewed all your exit options and evaluated the pros and cons of each related to your business and personal goals?
  7. Do you have a pre-transition process including but not limited to enhancing the value of your business, minimizing taxes, and planning for a smooth transition for all stakeholders, including your family?
  8. Do you have a transition plan with clearly defined goals, tasks, a team, a project manager, timelines, a budget, and a post-transition plan? Ideally, this is a multi-year implementation timeline.
  9. Have you considered management succession in your planning process and is your post-transition leadership prepared to operate the company upon your exit?  
  10. Do you have a post-business life plan tied to a financial strategy?

Successfully answering these questions will help give you a greater chance of enjoying a positive transition. If you cannot answer most of these questions, continuing to grow your business may be the best choice while you prepare your exit plan. If you need help putting a plan in place for your personal finances as you look to exit your business, please reach out to one of our CERTIFIED FINANCIAL PLANNERTM professionals to discuss how we can assist you in this critical life event.

CCMI provides personalized fee-only financial planning and investment management services to business owners, professionals, individuals and families in San Diego and throughout the country. CCMI has a team of CERTIFIED FINANCIAL PLANNERTM professionals who act as fiduciaries, which means our clients’ interests always come first.
How can we help you?

As a CERTIFIED FINANCIAL PLANNER™ professional, a Certified Private Wealth Advisor® designee, a Certified Exit Planning Advisor®, and a business owner, Brian specializes in helping business owners navigate their financial lives. In addition to his role as principal and owner, Brian guides clients in investment selection, risk management, estate planning strategies, succession plans, retirement options, and generational wealth planning and also serves as CCMI’s Chief Compliance Officer.

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