Every good business plan not only needs to discuss growth and expansion, but also how the exit or demise of the business should take place. Some say that this is a sign of lack of confidence or doubt, but any good businessperson must think through all the options. Here are some thoughts on your business exit strategy.
· Who has the option to buy what resources in which order? The orderly phase out of a business is much easier to accomplish upfront and objectively, rather than waiting until the emotionally charged liquidation phase.
· An appraisal should be conducted of all assets involved. This sometimes requires an outside appraiser or multiple appraisers depending upon the wishes of the owners.
· If financing is involved, make sure payments and terms are in writing with a defined, clear financing agreement. If you are the banker, then follow banker protocol.
· Establish where the money will come from, both long term and operating capital.
· Make sure all parties sign all written agreements and multiple copies are made and kept in a secure place.
Some preparation on the front end can really help an exit go smoothly if it ever comes to fruition.
Editor’s note: Dave Kohl, The Corn And Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at email@example.com.