Key Exit Strategies and Tips for an International Business

Achieving a successful business sale often comes down to having a cohesive exit strategy in place. This is especially true for international businesses. If you are considering selling your business in the future, building an exit strategy now can help you achieve a more profitable and successful sale. Read on to learn about key exit strategies and tips for international businesses every owner should know.

In this article, we discuss:

• Why having a business exit strategy is crucial for international companies
• Key components of successful business exit strategies for international companies
• Should you work with a business Advisor when planning your exit?

Related Article: How to Ensure a Smooth Transition When Selling Your Business

Why Having a Business Exit Strategy Is Crucial for International Companies

Not all business exits are successful. In addition, for international business owners who do eventually find a buyer and execute a sale, there are many different layers of success possible.

In this section, we discuss six benefits a cohesive business exit strategy can bring to your selling journey. They include:

• Increasing business income
• Improving business efficiencies
• Creating an easier exit experience
• Achieving a more profitable exit
• Winning more favorable deal terms
• Building a stabler business and securing your future

Increase business income

It is natural to think about the benefits of a business exit strategy as those that will come when the business is eventually sold. These eventual benefits are important, but it is also helpful to realize that some of the benefits arrive while you still own and run the business.

A big part of most business exit strategies is increasing the value of the company before selling. One of the main components of increasing value is driving business growth over an extended period of time.

One of the major upsides of driving growth in preparation for an exit is higher revenue and income now, while you still own the business. As the business owner, you can reinvest this extra income back into the business or keep it for yourself. After all, who doesn’t appreciate some extra cash in their pocket?

“The easier it is to manage your business, the more interest you will receive from potential buyers.”

Improve business efficiencies

Growth and higher revenues are not the only factors that increase business value. Buyers also want to see that a business is well-run and easy to manage. The easier it is to manage your business, the more interest you will receive from potential buyers.

There are many ways to increase business efficiency. For starters, improving your business and financial documentation and building standard operating procedures creates more organization within your company. Additionally, you can create teams or hire individuals to handle different aspects of your day-to-day operations.

As part of a cohesive exit plan, these steps serve to make your business more attractive to interested buyers. At the same time, they make it much easier for you to manage and run the business. These changes help to free up your time, allowing you to focus on big-picture tasks, continue planning for your exit, or enjoy more free time.

Create an easier exit experience

Selling an international business is often not an easy endeavor. Given the complexity of your multi-country operations, a successful exit can require time, dedication, hard work, and stress.

When you do decide it is time to sell, a cohesive exit plan also helps to create an easier exit experience. For starters, the improvements you made to your business as part of your exit plan can attract more interested buyers. More buyers translates to more offers and greater competition for your business.

This puts you in the driver’s seat. By having the luxury of multiple offers, you can pick and choose the one that best meets your needs. At the same time, it gives you more negotiating power and increases your buyer’s motivation to meet your needs. If they don’t, there is a long line of interested buyers who might.

All in all, this often translates to an easier buying experience for you. Given the complexity and stress often involved in an international business exit, any opportunity to ease the process is welcome indeed.

“Given the complexity of your multi-country operations, a successful exit can require time, dedication, hard work, and stress.”

Achieve a more profitable exit

In many cases, a quality exit strategy can help you achieve a more profitable exit than you would have otherwise. While this is not always the case, there are times when building and implementing an exit strategy can make a sizable difference in the amount you eventually sell your business for.

There can be many ways that this happens. A detailed discussion of business value is beyond the scope of this article; however, by implementing certain changes, you can either increase company SDE or drive up the exit multiple, or both, prior to selling.

Win more favorable deal terms

Achieving a more profitable exit is great, but it is not the only factor that determines the success of your exit. The specific deal terms you agree on with the buyer have a large impact on the overall success of the sale as well as your post-exit life.

There are a number of possible ways to structure your exit. For example, you could agree on an all-cash sale, creating a clean break for you as the owner. Or, you could choose to stay in a management role for a period of time after the sale. In this scenario, you may receive part of the payment up front, with the rest dispersed over several years.

The best deal terms for you depend on your specific goals and needs. However, by implementing a cohesive exit strategy and attracting more interested buyers, you put yourself in a better position to achieve more favorable deal terms overall.

Build a stabler business and secure your future

Ultimately, a successful business exit strategy allows you to build a stabler business and secure your future. By cleaning up your documentation, streamlining operations, and driving growth, you create a more profitable and easier-to-manage business. These same qualities serve to increase the value of your business, ultimately allowing you to achieve your exit financial goals and secure your post-exit life.

“Ultimately, a successful business exit strategy allows you to build a stabler business and secure your future.”

Key Components of Successful Business Exit Strategies for International Companies

Naturally, there are different business exit strategies for different businesses. What may make sense for one company might not be the best exit strategy for another. Regardless, there are several common elements to all successful exit strategies.

Start preparing early for your exit

The best time to start preparing for your exit is when you start your business. By thinking about your exit plan early, you can build your business in a way that makes it an attractive prospect for potential buyers when you do decide to sell.

If you have not been planning ahead for your exit yet, it is recommended to leave yourself 12–24 months before you plan to sell. This time can be used to assess the current state of your business, create a plan, and make necessary changes with enough time left over to allow those changes to have an impact and bear fruit.

“The best time to start preparing for your exit is when you start your business.”

Get a professional valuation

Getting a professional business valuation is one of the most important steps in your exit strategy. For starters, the valuation will give you a good idea of what your business is worth at the moment.

A valuation performed by a qualified individual should go beyond simply stating company value; it will tell also you how that value is calculated. It should also give you a clear picture of the state of your business, including its strengths and weaknesses. This knowledge is the foundation for creating a cohesive optimization plan.

Establish your business exit goals

Next, establish your business exit goals. How much do you want to sell your business for? What are the deal terms that you hope to achieve? When do you want to sell your business?

These are just a few of the questions you should be asking yourself when setting your goals. Take some time to think about them. Be ambitious but realistic. Your goals become the North Star that guides you throughout the selling process.

Assemble your exit team

Selling your business can be complex. There are many different tasks that need to be completed, and many skills are required to complete those tasks. For many entrepreneurs, it pays to enlist the help of qualified experts when creating a successful exit.

First and foremost, be sure to find an experienced business broker, or Advisor. We will discuss this in more detail in the next section. In addition, a skilled accountant, preferably with experience in the same industry, can organize your financial records and documentation prior to selling your business.

A personal financial planner is the person to talk to about post-exit tax planning and achieving your long-term financial goals. Lastly, a qualified business attorney can verify your legal documentation and help you assess and mitigate legal risks before selling.

“For many entrepreneurs, it pays to enlist the help of qualified experts when creating a successful exit.”

Optimize business operations for growth, risk, transferability, and documentation

Once you have gotten a valuation, listed your goals, and assembled your team, it is time to optimize your business operations in order to create a more sellable and valuable business.

When optimizing, it is important to take into account the Four Pillars of Value. These include:

• Growth
• Transferability
• Documentation
• Risk

By driving growth, mitigating risk, cleaning up your documentation, and ensuring the transferability of your business, you increase your chances of achieving a more profitable exit. Remember, leave yourself ample time between implementing changes and selling your business. This provides you with enough time to see the changes take effect and produce real benefits.

Review, analyze, and make changes as necessary

As you approach your target sale date, review your business performance, analyze how your optimizations are performing, and make any small changes as necessary.

Should You Work with a Business Advisor when Planning Your Exit?

Many entrepreneurs wonder if they should sell their business on their own or work with a qualified Advisor. For most, working with an Advisor is the right call. Your Advisor can provide you with an accurate and thorough valuation, suggest optimizations to make prior to selling, and guide you through the selling process.

The right Advisor should help you achieve a higher sale price, win more favorable deal terms, and experience an easier selling process.

What to look for in an Advisor

Not all Advisors are the same, and choosing the right one can make all the difference. When deciding on whom to partner with, look for someone who:

• Has extensive relevant experience
• You have a good rapport with
• Sets realistic expectations
• Has their own network of qualified buyers
• Is a fair and successful negotiator

“The right Advisor should help you achieve a higher sale price, win more favorable deal terms, and experience an easier selling process.”

Conclusion

Given the complexity of an international business, building a cohesive exit strategy is critical for achieving a profitable sale. By finding a qualified Advisor and leaving ample time, you increase your chances of accomplishing a successful sale and securing your post-sale future.