Management | Position Your Business to Maximize Value

Published: May 24, 2012, By Gary Hermsen

All business owners will leave their business one day. Leaving your business is likely to be the single largest financial and personal transition of your lifetime. If you plan for this exit, you can have greater control over the process. Planning will allow you to make the most of this valuable asset and leave on your own terms.

You can’t control what the mergers and acquisitions (M&A) market is doing at the time you are ready to sell your business, but if you are thinking of exiting your business in the next five years, there are things you can control, and you should start preparing for that now.

One of the most valuable things you can do as a business owner to prepare yourself for the exit is to surround yourself with a team of advisors. Never underestimate the experience and wisdom that your outside advisor team offers. Accountants, attorneys, financial advisors, and intermediaries all play a vital role in ensuring the successful sale of your business. The sooner you begin planning, the more money in your pocket at the end of the day.

Here’s one of the reasons you start planning for a sale three to five years in advance. Owners of a coating plant thought they were ready to sell their business. What they didn’t know was that because of their corporate structure, they stood to get hit with a hefty tax bill. Had they sat down with their accountant five years ago and discussed their future plans to sell the business, the corporate structure could have been changed well in advance of the sale, thus allowing them to save a considerable amount of taxes and ultimately put more money in their pocket.

Again, you cannot control the M&A market, but it is as good as it has been in several years. The increased activity is due in part to an economy that is gradually coming back and due to the trillions of dollars in cash that is waiting to be put to work. Converting and packaging companies that are mindfully planning ahead are desirable in today’s marketplace. Companies that are in a strong cash position are actively seeking growth through acquisition and private equity groups have assets that need to be invested in order to meet their fund’s goals.

We know all business owners will leave their business one day. Plan for a successful exit!

Gary Hermsen is a mergers and acquisitions advisor for Cornerstone Business Services. He has 13+ years of experience in the converting industry as an owner and former owner/operator of a paper converting company and more recently as an M&A advisor to others in the industry. Contact him at 920-436-9890; This email address is being protected from spambots. You need JavaScript enabled to view it..

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