Transaction Overview

Exit Planning Strategy

Strategic planning is crucial to any business enterprise. Whether expanding or contracting, planning begins with the board of directors and the company’s advisory team. Strategies vary based on the size of the enterprise and its goals for the future.

Corporate Strategy calls for putting together several strategic businesses that have similar or complimentary operating elements, such as location, marketing, technology, and intellectual property, under common management. The cash flow from these companies is usually reallocated internally to maximize long term return.

Adapting such a strategy usually means constantly seeking new investment opportunities, while entertaining divestiture of both high and low performing components.

Reviewing M & A Deals

Group Strategy calls for assembling, under one corporate group, operating units that have commonality to them all. Cash flows are allocated and reallocated back out to the individual business units, or into new internal or external investments.

Business Unit Strategy calls for acquiring, under common management those product lines that have commonalities. In most cases marketing and manufacturing are the common elements. In this case cash flows are reinvested into the most promising units from the acquisition of new product lines or start-up operations.

Product-Line Strategy is based on the theory of supplementing or replacing aging products whose life cycle is showing decreasing profitability with new or add-on products.

Functional Strategy addresses looking for lower labor rates, new methods of manufacturing, availability of raw materials, benefit packages, and any other methods of decreasing expense, increasing profitability, and addressing new market needs.

Business owners should account for the company’s strategic direction. Strategic planning provides the opportunity to create and position the business to leverage a competitive advantage in the future. For closely held businesses experiencing growth, the plan should ideally address the next three to five years. For the business preparing to sell, succession and exit planning strategies need to be addressed as soon as possible.

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