Making an Exit – Making Cash Out of your own Company
I was in consultancy with a client, he wanted to participate in the CenHolding to make an Exit, he wanted to make Cash Out of his company and then stop working.
It has a company that earns more than 5 million euros a year, he is a very good entrepreneur, but there is a problem.
The problem is that he is too fundamental for his company, without him, the company is worth zero.
Now pay close attention to what I’m about to say, let’s have a general overview of the topic.
Most people think that making an exit it’s like selling a home, you sell a house, you get the money, and then you do not think about it anymore.
It is that in most cases, it does not work that way. The company’s ownership changes, happen differently. These business acquisition dynamics are unknown to most entrepreneurs.
Now I’ll explain how it works.
When a company makes cash out, and is bought by a group, in most cases, the cash out contract, it also foresees the presence of the entrepreneur within the company. Basically it is as if the entrepreneur after the acquisition remains for a period to make the employee of himself. And this period can vary from contract to contract.
And often there is also an Earnout, a variable part of the price, linked to the results after the acquisition. This is done to reduce the risks of the operation.
So be careful, you can sell your company and capitalize, however, it is very likely that you are asked to remain as an employee in your company.
You will be asked for a period of transition to drive the companyand this period can also be long.
I confide you a secret. Often, who wants to buy a company, he wants to buy the founder too. To avoid this, you must train the staff well.
The juice is that you do not have to be the only brain of the company. Make sure to leave other brains on the company.
You must make sure to sell the company regardless of you.
You have to sell the business without you inside. That is, your business can not be based only on your talent.
If you are the company, and then you take away, the company dies. You have to make sure, to become superfluous to your company.
It must also work without you. Try to make the process of your company practical and simple. begins to work on the creation of an operating manual.
An operating manual that describes every practical aspect of how your business works. An operating manual that can be delivered to an employee with minimal training, that he can use for his work.
Start thinking like the big franchise chains, which have very detailed operating manuals.
So, if you want making an Exit or Cash Out of your company, it’s OK to participate in CenHolding (The Great Mastermind Dinner) to present it before investors and business angels, But pay close attention to what I told you.