Business owners put more planning into parties than sale of business

Over my career, I have witnessed business owners who spent more time planning for their children’s wedding, their 50th wedding anniversary, or even their fantasy football draft, than they put into planning for the sale of their business.

According to the quarterly Market Pulse Report, we know that when it comes time to sell their business, less than half of all business owners plan ahead. What that means is that most business owners wait for some kind of trigger before they go to market. Those triggers are reactive and often negative in nature, stemming from a family health issue, conflict, or (most commonly) burnout.

According to Christopher Snider, CEO of the Exit Planning Institute, 50% of business owners exit because of one of the five “Dismals Ds”: death, divorce, disability, distress, disagreement.

Unfortunately, that often means business performance is on the decline. Or, at the very least, it means the business owner hasn’t had time to make specific changes that will better position their company for sale or transition.

Selling a well-prepared business is a completely different experience than selling due to some triggering event. You have more leverage, and the process is less stressful as you are proactively executing a strategy versus reacting to an event in your life. With planning, you’ll be able to walk away from the closing table feeling satisfied and confident you made the right choices.

It’s true that you may still be able to sell your business without planning. But the more you plan, the more options you have when you want to exit. When a business owner is well-prepared with an attractive business, they typically receive more offers. That means you keep more leverage in the sale so you can go out on your terms.

The holy grail is when you have prepared, you’re emotionally ready, and the M&A market is at a peak. If you can pull that off, it’s typically a win in terms of value and structure. Plus, the sale process will go faster, reducing the inevitable emotional turmoil for you.

Not everyone achieves such perfect synchronicity, but your chances are significantly better if the sale is part of a planned strategy. Whether you’re 10 months or 10 years away from exiting your business, take time now to truly think about how and when you will leave.

Have a conversation with an M&A advisor at DealCoach. It doesn’t mean you have to sell right away. But you will walk away better educated about your exit options, the importance of timing, and how the process works.

By Scott Bushkie