A recent article by the Exit Planning Institute presents its latest research on business sales data. They found that 70-80% of businesses put up for sale don't sell. Of the ones that do sell the average price is less than half of what they thought it would be worth..
The biggest realization from the research was that most business owners didn't have realistic expectations or understanding of what their business is worth to a buyer. Next was that they weren't sale-ready or growth capable. The most common cause of this self-deception was the fact that they typically put off preparation until the last minute.
Whether you are a start-up or a 3rd generation family business, it is never too early to make the company sale ready. Investors in start-ups today ask owners in the first meeting what their exit strategy is? A great exit doesn't just happen, it is a conscious discipline and transformation process done well in advance. Regardless of what stage you are at in your business, you need to allow for at least 2 years to make the changes necessary to set yourself up for a great exit (the longer in advance you prepare, the greater the value). So make the commitment to get ready starting today. Then you need to Know to Grow to Sell.
Your exit preparation starts with truly KNOWing where you are at today, what a great exit means to all the owners, your personal financial goals, the value of the business today, what you want it to be, and what it will take to bridge that gap. This knowledge will guide your strategies to GROW the business. Growth requires real change. First you need to grow the people, who will then grow the business. It is crucial you as a leader grow the leadership of those who will be staying with the business when you leave. Building a great leadership team that has the proven discipline, skills and culture to grow the business, and is not dependent on you the owner, is the key to having a great exit. Lastly, it takes great courage to "let go" to SELL your business. It is your baby and being open to empowering others to lead, and finally negotiating a deal that meets your personal, financial and legacy goals, takes patience, adaptability and the courage to hold the course in executing your exit strategy well in advance.
Given the terrible statistics for business exits, the sooner you get ready the more you can be sure you will have the personal & financial legacy you truly want from your business.
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The EPI research summary on this can be viewed at https://exit-planning-institute.org/blog/what-is-the-main-reason-companies-put-on-the-market-dont-sell/