The Blog Squad

Its a fact that all businesses will start up at one point and either be shut down or sold to others are a future point of time. The resulting closure or sell off of assets or shares is typically called an exit strategy.

And while all businesses require one, few actually have one in place or have even bothered to think about one. But not only will every business experience an exit at some point, the owners of these businesses are likely relying on the proceeds from the future sale of assets and shares to fund their retirement.

So if the result of exit is very financially important to the owners, why don’t more of them have an exit strategy in place or at least be working on one?

There are many answers to this question, but the most common is that because a business exit will be in the future, sometimes the distant future, its not as important to invest time in as compared to what’s happening right now and therefore is not a business finance priority.

Another reason is that business owners just assume that when they are ready to sell someone will be ready to buy at top dollar and that the overall buy/sell process should be fairly straight forward. This tends to be an inaccurate assumption as work that can go into a successful and profitable exit strategy can be considerable and years in the making.

One of the reasons that pre-planning is important is because to acquire a premium price, buyers typically will need to secure business financing. Business financing for assets like equipment and real estate will be far easier to come by if the business has been set up for sale in terms of financial statements, asset condition, transition plans, and so on.