Around the Web: A Week in Summary
A recent article from VR Business Brokers entitled “Why an Exit Plan is Critical When the Time Comes to Sell” explains the importance of an exit plan and what a business owner needs to consider when creating one.
A properly created exit plan can take around six months to create and up to four years to implement. For this reason, it’s crucial that a business owner begins this process early on. A properly designed exit plan can be the best way to ensure that your company is acquired by the most qualified buyer and that all of your needs are met in the deal. In order to begin to put together the ideal plan, a business owner should ask themselves the following questions:
- What are your preferred options and timing for exiting the business?
- What family members are involved in the business and what are their objectives?
- What are your financial objectives and retirement plans?
- What is the value of the business now?
- What key actions are necessary to increase business value and position it for sale?
- What actions are necessary to manage estate, trust and tax issues you will face through retirement and beyond?
- What changes in the business and your role are needed now to preserve your quality of life and your passion for the business?
Once an exit plan is completed, it is important to take it seriously, update it regularly, and call on professional help whenever possible to carry out individual steps in the plan.
A recent article from Divestopedia entitled “Options for Business Real Estate When Selling a Company” explains the options that are available to business owners regarding real estate that is tied to the business, and the factors to consider when examining each option.
When you choose to sell your business, there are three options that you have when it comes to the real estate:
- Sell or lease to the buyer
- Sell or lease to a third party
- Hold on to the real estate and sell it later
Choosing the best option for you is a matter of deciding what level of involvement you’d like to have after the business is sold, if the continued income is important to you and your bottom line and how the real estate affects the value of your business. While making this decision, it is also important to consider the needs of your buyer and to consult the proper professionals regarding taxes and value.
A recent article from Divestopedia entitled “The Single Most Important Lever Driving Corporate Value” discusses why corporate governance is the most important driver in the value of a business.
Corporate governance is defined as the system of mechanisms and processes by which a business is controlled and directed. A corporate governance system:
- Consists of rules, practices and processes that establish, monitor and ensure the achievement of a company’s objectives;
- Sets out the rules and procedures for making business decisions;
- Details the rights and responsibilities of participants in the business, including owners, directors, managers and employees; and
- Monitors all of those things on an ongoing basis to ensure they are complied with.
Having a successful governance system in place is key to having a business that smoothly transitions between owners and can successfully thrive throughout generations of leaders.