4 Steps to Understanding Your Exit Strategy

Posted on August 11, 2011

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[Jamie Waldren-Washington Technology]

The world of government contracting can be capricious and unforgiving. One year, you are servicing a $20 million dollar contract and managing dozens of employees; the next year it’s over, and you are scrambling to find a comparable engagement or face layoffs and reduced revenues.

In fact, when it comes to exit planning, timing is crucial. Windows of opportunity can be dismayingly small and infrequent. If you aren’t watching for them and aren’t prepared when they appear — if you blink — you’ll miss your best, and perhaps only, chance to secure an optimal sales price.

Timing it right

According to the Exit Planning Institute, 75 percent of former business owners report that the sale of their companies did not meet their business objectives. In my experience, post-exit dissatisfaction levels among government contractors are similar, and maybe a good deal higher. But it doesn’t have to be that way.

If you are like most government contracting executives, you’ve got plenty to think about: from managing your team of contractors to responding to requests for proposals and handling the myriad details associated with running your firm. Apart from setting aside money for retirement, there’s a good chance you haven’t given your retirement strategy much thought.

But it takes foresight to make the most of your opportunities. When the time is right — when market conditions, business economics, valuation metrics and personal circumstances align — you need a plan in place, ready to implement quickly, in as little as two to three months. You also need a system to monitor these changing factors so you won’t miss an opportunity while you are busy running your business.

The exit plan

Your financial security could depend on the quality of your exit plan, a comprehensive road map that will transition you out of your business and into the next phase of your life. Before you begin drafting an exit plan, start thinking about what you want and how your will get there:

  1. Set clearly defined goals — for yourself, your family and your business.
  2. Decide how you want to sell or transfer your shares.
  3. Tailor your investment portfolio to let you live the post-work life you always imagined.
  4. Be prepared — psychologically and operationally — to pull the trigger when the time is right.

This last point is critical. You have to be ready to make the transition at any moment. If you hesitate, you will lose. Perfect conditions can deteriorate rapidly, and the best times to sell are almost always your busiest and least convenient.

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Posted in: Business