Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

April 15, 2017

Top reasons why business owners avoid planning an exit strategy

By Achim Neumann

 

At some point, every business owner will end up relinquishing the reins of the company they built. How this occurs is up to them: they can either plan how this process will play out, or they can let blind circumstance sort out the details.

Actively planning an exit strategy can help entrepreneurs leave their company with the financial freedom they’ll need to stride confidently into the next phase of their life.

Most don’t bother, though, as a number of mental roadblocks have convinced them that exit planning is unnecessary.

Below, we’ll go over the most common misconceptions which prevent owners from planning how they’ll exit their company.

1) They think buyers will come to them unsolicited

This assumption is a deceptively simple one: build a business until it makes sense to sell it; once they post their sales ad, buyers will magically flock to them, checkbooks in hand.

The truth is, the majority of successful sales take place within a finite window of time. Buyers are far more likely to make a move when the economy is vibrant versus bad or uncertain times.

Even when the economy appears to be doing well, not all aspects might be. Without a well-defined exit plan, factors ranging from the state of the M&A market to the seller’s health can complicate the sale of a business.  

2) They don’t think their company has a high enough net worth

When an entrepreneur is in startup mode, it can be hard for some of them to envision the endgame. However, without a plan in place, it can be hard for an owner to find their way to the finish line.

Without an exit plan to inform their future goals, they work in their business instead of working on it, which can lead them to tread water indefinitely. Years down the road, they are no closer to where they think they need to be to begin planning their exit.

By taking a few hours to step back from day-to-day operations, owners will free up the bandwidth they’ll need to define their long-term goals and the steps they need to take in order to increase the value of their business.

Otherwise, chances are good they will remain mired in the stagnation that occurs when an owner becomes an employee within their own business.

3) They assume they will need to stay on after the sale to train the buyers

Some businesspeople assume they will have to stick around for an extended period after a sale to ensure the transition period is a seamless one.

As such, they conclude that exit planning makes no sense, as there is no way they would be able to leave shortly after selling their business.

However, if they commit to creating a management team beforehand which is capable of running a profitable business, they may be able to make their exit within a couple months post sale.

Owners who fail to do this resign themselves to living out the scenario they think is inevitable: a long and painful transition that can last years.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

Comments are closed.

Any questions? Please contact us at 732-872-6777
Call Now

Client Testimonials

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

“A Neumann & Associates is the only business broker I would use or consult with. They have assisted with 3 business sales over the past 15 years with me. They are honest and sincere and have always performed better than my expectations. They are the only one i would use for the sales of my businesses.”

James Belanger, Business Owner

“I wanted to take a second to commend the exemplary customer service from both you [Karin Neumann] and Mr. Valentino. It’s both a rarity in the industry, and very much appreciated.”

Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer

“Purchasing a business through this firm was a pleasure. Gary was very professional and transparent throughout the entire process. I look forward to working with A Neumann & Associates in the future.”

William Klemens, Buyer
view all testimonials

Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

call us now
Contact Us for a Free, Confidential Consultation

Experienced M&A Advisors available

Full Name
Email Address
Phone Number
Message