Retirement Plan - Not Such a Quick Fix
If your endgame plan is to sell your business and retire off of its sale then you may want to research the market ahead of time. Not only do Buyers demand proper financial records and detailed documentation - but sales could sometimes take years to close. A recent study by the Alliance of Merger and Acquisition Advisors found that 7 out of 10 midsize businesses will transfer ownership during the next decade but that 90% are ill-prepared for those transactions. With increased competition and a slowing economy buyers are doing extensive research. With a three to seven year lead time ensure that your financial statements and business plans are organized and cutback on unnecessary expenses. When you are ready to sell, obtain professional help to figure out how much your business is worth and how to conduct the sale.
Dale, Arden. “Want to Sell a Business? You May Not Be Ready.” Wall Street Journal 8 Jan. 2008
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Alpha Omega’s Opinion:
At Alpha Omega Capital Partners we can help you prepare to exit on a long-term basis. The decision to exit should be based on compromise between three sets of issues:
1. Internal Discount Factors,
2. External Discount Factors, and
3. Personal Needs.
We offer seminars on exit planning and a “Value Mentoring” program where we coach our clients for as long as it takes - several years if necessary - to prepare their companies so they can exit at maximum value. Through strategic planning and good management, Internal Discount Factors can be eliminated or controlled. The purpose of Value Mentoring is to identify and eliminate as many of these discount factors as possible. The other two issues that must be considered are External Discount Factors and Personal Needs. External Discount Factors can only be controlled through timing and include factors such as Economic Conditions, Lender Confidence, Interest Rates, Industry Trends, Global Trends, Tax Rates, etc. Personal needs can sometimes be planned but unfortunately, they frequently dictate the schedule. These factors include Retirement, Spiritual Pursuits, Travel, Family, and Reduction in Personal Financial Risk. Unfortunately, other factors such as Health Problems and Divorce are very difficult to control. For that reason, it is imperative that every business owner operate their business as though they are going to sell it tomorrow! Alpha Omega Capital Partners can help you identify the issues that matter.
Anthony Vincent