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For many business owners, a significant portion of their net worth is tied up in the value of their business, business, yet many lack a concrete exit strategy. It’s not uncommon for business owners to view their company primarily as an income source (perhaps for family members as well as themselves), a job, or a “cash cow,” rather than what it truly is: an investment, and likely their most valuable asset. While these same business owners may dedicate time to managing their investment portfolios and/or consulting with their wealth managers, they often overlook the necessity of maximizing the long-term value of their largest investment through an optimal exit strategy.

A private business represents wealth that can’t be accessed today, and most business owners don’t have an exit plan in place to convert it to cash when necessary or desired. These owners have likely made significant personal and financial sacrifices along the way, and are finally reaping the rewards of their hard work. They’re understandably focused on the day-to-day demands of the business, as that drives near-term results and puts cash in the bank today.

However, the same focus that led to success for these business owners can prevent them from taking a step back and focusing on the endgame, which is a sale of the business and/or creating a succession plan. They should be addressing these critical questions:

  • What is the current value of my business?
  • How can I increase its value?
  • What’s the best way to exit my business when I’m ready?

In Part II we explain what these steps are and how to get your exit strategy ready.

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