exit planning preparing your business for sale

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Exit Planning Basics:

Practical Advice for

Business Owners

Hosted by Washington BBI

Presented by Peter Busacca

Washington BBI The brokers with an end-to-end solution! 1

1. Title2. Hammer3. EP POV4. EP to Me5. EP to Seller6. Travel e.g.7. Need to Know8. Quotes9. Buyer Types10. Assessment11. Advisory Team12. Buyer Worries 13. Buyer Wants14. Transfer Knowledge15. Chart16. Seller Feels17. If No EP18. Get Started!19. Contact Info20. Knowledge

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Keep in mind, to a hammer….

Washington BBI The brokers with an end-to-end solution!


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What is Exit Planning? Definition depends upon POV

To a: It’s all about:

Banker Keeping Account

Business Broker Salability & Targeting Buyers

Business Valuator Cash Flow & Assets

Business Consultant Key Management Layer

CPA Taxes & Financials

Estate Planning Lawyer Probate & Taxes

Financial Advisor Retirement

Insurance Broker Mitigating Insurable Risk

Transaction Lawyer PSA, Title, & Risks



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To me, Exit Planning is all about…

1. Helping the owner to prepare the business for sale to the kind of buyer they want to sell to at the time they want to sell.

2. Maximizing business value & salability.

3. Minimizing those “gotchas” that cause buyers to fret.

In short, making the business enticing

to the right kind of buyers.



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What if you ask a business owner?

To a seller, Exit Planning is:

• Not something to worry about now.

• Something they will get to eventually.

• Don’t know why it matters.

• Too busy to fuss with it now.

• Plans never work, so why plan?



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Travel: What do you need to know?



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What does the owner need to know?

• Exit planning is not a document, it is a journey.• It’s not just about the exit.

• Prepping for sale: • Current condition of the business.

• Current ballpark value.

• Target selling price.

• Time frame.

• What entices buyers to buy.

• What to fix & in what order.

• How to get from here to there!



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Back to Our Travel Example



“If you don't know where you are going, any road will get you there.” - Lewis Carroll

“If you don’t know where you are going, you may not get there.” - Yogi Berra

The value of exit planning isn’t the exit. Amazing things happen when you know where you are going.

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1) What kind of buyer to sell to?

• Family

• Employees

• Competitor

• Financial (PEG or Individual)

• Strategic Buyer

Who might pay a premium to buy?

Where should owners begin?



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Assess Current Condition

2) Where are we right now?

• Company vision?

• Financial condition?

• Key leadership team?

• Operational efficiency?

• Sales effectiveness?

• Marketing effectiveness?

• IT capacity and capabilities?



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Build Your Advisory Team

3) Depending on the situation….

• CFO/Controller/Cash Flow Coach

• CPA

• Business Intermediary

• Insurance Broker & Investment Advisor

• Business Valuator

• Consultant/Accountability Coach

• Transaction Lawyer

• Estate Planning Lawyer



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What do buyers worry about?

Individual buyers:

• What if I fail?

• Is the seller hiding anything?

• Can I feed my family & pay off loan?

• Where do I even begin?

• Am I paying too much?



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How do you ease the buyer’s mind?

• Strong history of growing EBIT (3 years+)

• Diverse customer base

• Strong management team

• Clean, organized, efficient operations

• Vision for growth

• Clear, specific transition plan!



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How can you help the business to stay sold?• Good targeting of buyer prospects

• Good screening / Strong candidates

Transferring title is (relatively) easy.

Transferring the knowledge is not.

Do everything you can to ensure that the know-how of the organization is methodically and thoroughly transferred to the buyer.



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Planning Process



Head spinning?

Overwhelmed?

Too much?

Can’t I ignore it?

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Planning Process

What if owners don’t plan?

- Business is not worth what it should be- Focus on the tactical issues – fire fighting- Ignore the strategic issues – building value- Economy forced many owners out of business- Insufficient funds to retire- Can’t get medical coverage once retired- Endless loop – can’t plan, can’t afford not to plan- Excess stress causes medical issues- Government takes too much of a cut when you die



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Planning Process

What owners need to do right now!

- Talk with their spouse to paint the picture

- Talk with their CPA!

- Talk business intermediaries to understand process

- Work with their CFP to assess retirement needs

- Determine what other advisors are needed & when

- Get started!



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Contact Info

Peter Busacca [email protected]

Washington BBI 425/391-8720 www.WashingtonBBI.com

Mailing Address 400 NW Gilman Boulevard, Unit 2208

Issaquah, WA 98027

Office Address: 38579 River Street, Suite 14

Snoqualmie, WA 98065



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A Little Knowledge…



Margi: “What part of ‘NO’ don’t

you understand?!!!”

Johnny: “The ‘K’. I just don’t get

the ‘K’”