Is the M&A Market the Best Exit Path for You?

Is the M&A market the best exit path for you? The transition strategists senior female leader
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Owners who ask me whether I recommend selling their companies to a third party are often stunned by my answer: Maybe or maybe not. They are stunned because I’m a transition strategist who works with owners planning business transitions every day. And yet, I can’t recommend an exit path until owners tell me what they want the transition of their companies to achieve. Is the M&A market the best exit path for you? Maybe, but let’s go a bit deeper into the question.

The first and fundamental question: Why?

The question “Why do you want to transition your company to a successor?” is fundamental because your answers to it are the backbone of your business transition. Once you determine what you want the transition of your company to accomplish, you have a gauge by which to measure whether the choices you make at every step of your transition journey move you closer to your goals.

Most owners want the transition of their companies to successors to accomplish at least two goals:

  • Financially stability
  • Keep their important relationships intact.

Since a sale to a third party is just one of many exit paths that can accomplish these goals, let’s look at other possible transition goals.

What are your business transition goals?

What do you want your transition to accomplish?

  • Do you want to leave your company on a date you choose?
  • Do you want a successor to keep the business in the community and retain you employees?
  • Is your ideal successor a business partner, child or group of employees?
  • Do you want your company to continue to generate wealth for you and/or future generations?
  • Do you want your company to remain a platform for your children develop successful careers?
  • Are your company’s reputation and the legacy you’ve built very important to you?

What are your post-transition goals?

Choosing a successor isn’t only about what you leave behind—the company, employees and community—it’s also about the life you will live after you leave your business. What you want your life to be?

  • Who do you want to share it with?
  • Where do you want to live?
  • What do you want to do?

The answers to these questions can help you determine if selling to a third party is the best exit path for you.

Put your exit path options in writing.

Jot down your goals for yourself, your company and the people who are important to you in one column; then add columns for all possible exit paths. Put maintaining the status quo at one end of your options spectrum and a sale to a third party at the other. Between the two insert variations of selling/gifting ownership to children, employees and business partners. I’m describing The Options Matrix™, a tool I designed to give owners a snapshot of how exit paths compare to one another and to their objectives.

When you look at each of your goals in light of each exit path, ask yourself : Is goal is achievable, at risk, unachievable or unaffected using that exit path?

Is the M&A market the best exit path for you?

If you aren’t sure if the M&A market is the best exit path for you, I encourage you to establish your goals for your transition first. Only then can you sort through your options and choose the one that launches you into the next phase of our life and leaves your company and important relationships healthy and intact.

Elizabeth Ledoux is a co-author of the award-winning It’s A Journey: The MUST-HAVE Roadmap to Successful Succession Planning,  as well as Accelerate Your Entrepreneurial Flight and Understanding the Growth of the Entrepreneur. She frequently speaks to organizations and business owners about challenges and opportunities in private and family business transitions, business and individual growth, and the business succession journey.

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