“Every deal is unique and has its own detours and surprises, but selling your business has discrete steps that all business owners should know.”
This how Kevin Cudney, M&A attorney with Brownstein Hyatt Farber Schrek, opened last week’s “Selling Your Business” program held with Janiczek Wealth Management.
Janiczek recently hosted an expert team of five respected advisors to discuss business exit planning for high net worth individuals. Around the table sat five like-minded professionals who interacted in a case study regarding an upcoming business sale and the necessary steps to complete the transaction. The group included an estate attorney, a consultative tax professional, a life insurance advisor, and two comprehensive wealth management professionals.
When successful business owners start the planning process of selling their business, in many cases the largest asset that person owns, many are looking at things such as; what multiple of my EBITDA is reasonable, what business broker or investment banker should I be using, etc.? The first step in the process really starts with the question “how much do I need to realize from the sale of the business to fund my family’s lifestyle for the remainder of our lives? I like to equate this process to building a home, if your foundation (or in this case accumulation needed), is not thoughtfully and carefully calculated and executed the rest of the process is built on shaky ground.
I recently presented to a room full of successful business owners on the topic of “ensuring your business is part of your retirement strategy”. What became immediately clear was the level of success these individuals have recognized as they continue building their respective companies… and ultimately their net worth. The stories shared had many similar financial characteristics including: record sales growth, impressive earnings, strong revenues, great cash flow, ability to reinvest back into their companies, as well as healthy distributions back to the owner that allowed for living an enviable lifestyle.
Stepping away from the discussion of their shared business successes, I inquired on how many owners had a concise vision of when they planned to step away from their business and what their ideal retirement (or post-business life) looked like. Roughly 50% of the room raised their hand with the majority planning to exit within 3 to 10 years. They shared visions of extensive travel, second homes, giving back to their communities, spending quality time with family, new hobbies, starting a new business, etc. The overriding goal was to be financially independent of course!