Economic Recovery Resource Center:
Planning for an Exit

It is never too early to plan for a business transition – coming up with your own exit plan.  

Planning for an Exit

The COVID-19 pandemic is a medical crisis, but it quickly has become an economic crisis for most business owners. The crisis is affecting day-to-day operations and workforces, and impacting the financial strength and enterprise value. Even so, in the mid- to long-term, business operations are expected to return to normal and with enterprise valuations recovering as a result. (see article on preparing your business for sale)

 

You may be surprised to learn that in any given year roughly 20-25% of businesses choose to sell because of a crisis. It could be that the business owner or a close family member suffered a serious illness or accident. Or, it may be that divorce, unexpected economic news, or another personal circumstance intervened to change the business owner’s priorities. Suddenly, operating a successful business took a back seat to dealing with these pressing issues. 

Without a pre-established exit plan, a swift change in personal circumstance or priorities can result in damage to the business and a less-than-optimal sale transaction. When a business suddenly loses the owner’s day-to-day attention, direction and passion, it also loses his or her strategic vision, capital resources, relationships with key customers and suppliers, and the rudder that kept the company moving forward. In short, without an exit plan, the value of the business can suffer a nearly-immediate decline. 

Uncertain if you have a viable exit plan? Here is a quick litmus test:

Can you go on an international vacation for at least a month without having a detrimental effect on your business?

If the answer is YES

You're in good shape - now just finalize it.

If the answer is NO

Now is the time to put one in place. You owe it to yourself, your family, your employees, your suppliers, and your customers to have an exit plan in place that will direct the smooth and orderly transition of ownership when the circumstances dictate.

Need Help Developing an Exit Plan?

ACT Capital Advisors can assist you with developing an exit plan specific to your business. It takes some thought and work, but it is less onerous than at first it might sound. We start with understanding your company. What makes your business unique? What are the key business risks? How can you mitigate those risks? Do you have a team of advisors? Are you ready and prepared for a diligence process? You spend more of your life building your business than you spend with your family. Allow us to help you make it all worth it by maximizing the value of your life’s work.

ACT’s Coronavirus Response Team is available to help you design an exit plan for your business to help you respond to the current COVID-19 challenges or any future challenges that might come your way. Please reach out to coronavirusteam@actcapitaladvisors.com.

Contact Us!

Questions on Financing? We can help. 

ACT Capital Advisors

7525 SE 24th St.
Mercer Island, WA, 98040

(206) 486-3400

coronavirusteam@actcapitaladvisors.com