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Outsourced CFO Services Tip of the Day: Know Your Exit

BY Eddy Hood In Outsourced Accounting Services On Apr 10, 2012 With 2 Comments

Many of you may have heard that Facebook just acquired Instagram for a cool $1 Billion. Not a bad payoff for a picture app. What do you think went through the minds of the Instagram folks when the deal was sealed? How about... “Holy smokes we’ve hit the jackpot!”

Do you think originators of Instagram would have ever dreamed up an exit from their business worth $1 billion? Who knows? It’s sure fun to think about though.

Today’s outsourced CFO services tip is all about knowing your exit. What is an exit anyways? It’s really the answer to the question “What will I do with my business once it’s built?” You have a couple of options to consider: Keep it or sell it.

Before you build your company, you need to have a decent idea in mind of how you will exit. Which option do you prefer? We are going to talk about option #2 today, but know that both options are great.

When most companies get to the sales table, valuing the company seems to be one of the hardest discussion points. Make sure that you are armed with outsourced CFO services or an in-house CFO to help guide you through the acquisition. Your CFO should be well versed in valuations, tax consequences, and negotiation tactics. Before you get that far though, read below for 10 questions that you should know the answer to.

 

If you opt for selling your company at a future date, here are 10 questions you must know the answer to:

  1. What does my company look like when it is built?
  2. What entity structure do I need to set up for my company to make the most of the exit?
  3. How much will be we doing in revenues?
  4. How large will our market be?
  5. Who will have enough interest to buy my business when it’s built?
  6. How long will it take to get there?
  7. How much money do I need to raise, if any, to build my business?
  8. How much equity will I have in my company when that time comes?
  9. What will my equity be worth?
  10. What will be the tax consequences of that exit?

There are more things to consider for sure, but this list gives you a quick start guide towards thinking big.

Ignite Spot provide outsourced CFO services to growing companies throughout the nation. If your business is ready to grow, but unsure of how to financially make it happen, consider calling us for a free consultation. Our CFOs are ready to help and act as a trusted advisor in the growth of your business. Call us today at 801-336-5311.

My name is Eddy Hood. I've coached over 500 businesses on how to become more profitable. I'm the Founder & CEO of Ignite Spot, and I have mad parallel parking skills.

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