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The Art of the Exit
The Complete Guide to Selling a Business With $1 Million to $10 Million in Annual Revenue
Questions Answered in This Book
- How long will it take to sell my business?
- How do I maximize the price?
- Should I finance the sale? What if the buyer defaults?
- Should I tell my employees about the sale?
- Who is most likely to pay top dollar for my business?
- How do I keep the sale a secret from my employees, customers, and competitors?
- What tricks can I use to maximize my negotiating leverage?
- What clauses should I look out for in the purchase agreement?
- How do I value my business?
- How do I prepare my business for sale?
- What professionals do I need to hire, and what do they charge?
- How can I keep my employees from leaving when they find out?
- How will a broker or M&A advisor market my business for sale?
- How do I make sure a buyer is serious before I share sensitive information?
- How can I prepare for due diligence? What can go wrong?
Overview
Less than a third of businesses on the market actually change hands. So what does this mean for you? Think about it — with a significant amount of your wealth tied up in your business, planning your exit is one of the most critical decisions you’ll make.
The Art of the Exit contains winning strategies I’ve learned from 20 years in the trenches selling businesses. This definitive guide is broken down into 10 simple steps from preparing your business for sale to orchestrating the closing.
Table of Contents
Introduction
- The Decision To Sell
- How Long It Takes To Sell
- Note on Exceptions and Size
Chapter 1: Preparing for the Sale
- Preparation vs. Execution
- Why Your Business Might Not Sell
- Increasing Your Business’s Value
- Informing and Retaining Employees
- Organizing Key Documents
- Normalizing Financial Statements
- Why Some Businesses Don’t Sell
Chapter 2: Valuing Your Business
- 5 Reasons Valuations Vary
- The 2 Most Common Measures of Cash Flow
- Choosing the Right Measure of Cash Flow
- The Only 2 Valuation Methods You Need
- 9 Valuation Concepts to Understand
- Choosing the Right Appraiser
Chapter 3: Financing
- Where the Money Comes From
- Selling Your Business for All Cash
- Seller Financing
- Let Uncle Sam Finance Your Deal – SBA Financing
- Financing a Business With Retirement Funds
Chapter 4: Team
- M&A Advisor
- M&A Lawyer
- Accountant
- Tips for Hiring and Working With Your Advisors
- Other Specialists
Chapter 5: Buyers
- The 4 Types of Buyers
- Individual Buyers
- Financial Buyers
- Strategic Buyers
- Industry Buyers
- Key Points
- Why a Company May Acquire Your Business
Chapter 6: Marketing
- Fishing vs. Hunting for Buyers
- Fishing – Using Ad Portals
- Hunting – Using Targeted Campaigns
- Other Ways To Find Buyers
- Maintaining Confidentiality
- An Introduction to NDAs
- Preparing an Information Memorandum
- Screening Buyers
- Screening Employees
- Screening Non-U.S. Citizen Buyers
- Screening Investors
- Avoiding Tire Kickers
Chapter 7: Meetings
- Meeting the Buyer
- Guide to Negotiating Tactics
- Your Secret Negotiating Weapon
Chapter 8: Offer
- It’s More Than Price – Negotiating Deal Structure
- The Parties’ Conflicting Objectives
- Factors That Affect the Scope of Negotiations
- Negotiating the Letter of Intent
- Locking It Down With a Deposit
- When To Take Your Business Off the Market
- I’ll Pay You Later – Considering an Earnout
- What Happens to Debt
- Trust But Verify – Escrow Holdbacks
- Legal Transaction Structure – Asset vs. Stock Sale
- Non-Compete Agreements
Chapter 9: Due Diligence
- Halfway There – The Purpose of Due Diligence
- Sample Due Diligence Checklist
- Transferring the Lease
- Give the Tax Man His Cut – Allocating the Purchase Price
- How Your Entity Type Affects Deal Structure
Chapter 10: Closing
- The Final Days – Overview of the Closing Process
- Almost There – Preparing for the Closing
- Negotiating the Purchase Agreement
- Not So Fast – Representations and Warranties
- Skeletons in the Closet and Indemnification
- Almost There (I Promise!) – Escrow
- You Made It – Closing Day
- After the Closing
Conclusion
- Final Thoughts
- Additional Resources
Appendices
- Appendix A: Glossary
- Appendix B: Due Diligence Checklist
- Appendix C: Purchase Agreement Clauses
- Appendix D: List of Closing Documents
- Appendix E: Escrow’s Duties
- Appendix F: Recommended Reading
The Art of the Exit
The Complete Guide to Selling a Business With $1 Million to $10 Million in Annual Revenue
About the Author
20+ Years of M&A Experience: Over 20 years of experience facilitating mergers, acquisitions, sales, and other business transfers with transaction values up to $500 Million.
300+ Transactions: Successfully participated in or managed the sale of over 300 privately held companies representing both buyers and sellers in North America, Central America, South America, Europe, and Asia.
Author of 6 Books on M&A: The Art of the Exit, A Beginner’s Guide to Business Valuation, The Exit Strategy Handbook, Closing the Deal, Acquired and Food & Beverage M&A
Host of M&A Talk: Host of the #1 podcast on mergers and acquisitions – M&A Talk.
Host of Food & Beverage Talk: Host of the #1 podcast on mergers and acquisitions specializing in the food & beverage industry – Food & Beverage Talk.
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