Robert Young, Asst. VP with Merrill Lynch, Pierce, Fenner & Smith, Inc., recently sent me a high quality white paper produced by Bank of America/Merrill Lynch discussing Exit Strategies.
The paper starts with the fact that “it’s never too early to start planning for that transition.” Truer words could never be said, especially in relation to businesses owned by the self-employed. There are too many ‘what ifs’ in life. The effective transition of your business is what is best for your family and your customers.
Business owners should look at a strategy that maximizes cashflow as well as value. This usually means that you must be willing to sell well before you may be ready to retire. Many solopreneurs will simply ‘slow down’ by refusing new work, or taking easier jobs. This slowly decreases the value of your business. Would you hold onto a stock that did the same thing? No! You would sell that stock if you saw that the business was losing value!
How do you know what your business is worth? By working with an AICPA CVA/CVB, you can determine what method your business can be valued. Our firm recommends OnPointe Valuation, LLC (run by Gene Cole, CPA/ABV, CVA) or Henry & Horne, LLP (Don Bays, CPA/ABV, CVA). Valuations can often cost in the $5,000 – $10,000 range, so it is important to have a good understanding of what value these accounting professionals can offer your business.
To learn more about maximizing business value, please contact Robert (link above) to request a copy of the whitepaper.