By Mark Tepper, the president of Strategic Wealth Partners and an EO Cleveland member
Like all major events in life, the day you sell your business can either be one of the greatest, most joyful things you’ll ever experience or one that will bother you for years to come. For too many entrepreneurs, it’s the latter.
The Bad and the Ugly
Throughout my time in the exit-planning world, I’ve come across a lot of disturbing statistics. Here’s an interesting one: Only about 20 percent of businesses for sale will successfully transfer to another owner. That’s a lot of broken entrepreneurial hearts. Even for entrepreneurs who are lucky enough to sell their businesses, the facts aren’t pretty. Half of all deals to sell a business fall apart before they can close. According to Evolve, only one in ten business owners receive a price anywhere close to what they wanted, leaving 75 percent of them dissatisfied with their sale. Yikes, right? Those facts are probably enough to make you want to cling to your business for dear life—or at the very least, take a long nap.
It’s not all bad when it comes to exiting your business, though. Here’s the good news: If it’s done right, selling your business can and will give you what you want—whether that’s a big payout, a secure retirement, more time with your wife and children, or simply a less risky financial profile. Luckily, it’s really not that hard to make the sale of your business a success. A thorough exit plan will increase the value of your business, give you control of when and how you leave, reduce uncertainty, improve your chances of selling, and much more. (It can be a fun process, too, I promise.)
As John Warrillow, founder of the Sellability Score, points out in the foreword to my book, Walk Away Wealthy, entrepreneurs who have sold their businesses are the wealthiest people in America. In fact, 80 percent of the high-net-worth men and women Merrill Lynch targets are former business owners who have enjoyed a liquidity event! I’d bet money that they did sound exit planning for months—if not years—prior to their sales.
If you want to be popping bottles of champagne the day you sell your business rather than looking for a rock to crawl under, it’s time to start exit planning today.