A serious buyer has made an offer for your business. You may be open to selling, but that doesn’t mean you’ve decided to sell now—or to this buyer. The offer does give you something useful: a real number to test. If I sold my business for something close to this offer, would the transaction work financially for me? Before you accept the offer, reject it, or decide to keep building the business, that’s the first question worth answering.
Your Personal Financial Exit Number
Your Personal Financial Exit Number is an estimate of the net proceeds you need from a sale for the transaction to work financially for you.
For some owners, that means knowing a sale can provide the financial security they want for themselves and their family. For others, the proceeds may also need to support another business venture, real estate, or other investments.
Determining whether an offer gets you there takes more than looking at the purchase price. Taxes, debt repayment, and transaction costs can reduce what you ultimately receive. And not all of the value may be available at closing. Part may depend on an earn-out, remain invested through rollover equity, be held back in escrow, or be paid over time through a seller note.
So the comparison isn’t simply between your Personal Financial Exit Number and the headline purchase price. You need an estimate of the transaction’s net value to you, including what may be available at closing and what may remain contingent, deferred, or invested. Now you have a useful comparison: what this opportunity may actually provide versus what the sale needs to provide for the transaction to work financially for you.
If Today’s Offer Works, What Would Make Waiting Worth It?
If today’s offer falls short, waiting may give you time to grow the business, improve margins, reduce debt, or otherwise close the gap.
But what if today’s offer already looks financially viable for you? You may still choose not to sell. You may believe strongly in the company’s growth, enjoy running it, or simply not be ready. But now you’re making a different decision: whether to pass on an opportunity that works financially and continue owning and building the business toward a later sale.
That’s where your Waiting Hurdle becomes useful. Your Waiting Hurdle is how much more you would need to net from a future sale for passing on today’s opportunity—and continuing to own and build the business toward a later sale—to be worth it to you.
The comparison isn’t between two offers you have today. Today’s opportunity is real. The future one isn’t. The buyer in front of you may not be there a year or two from now. Your business may grow as expected—or it may not. Buyer appetite, financing conditions, your industry, the broader market, or your own circumstances may change. So the question isn’t simply whether you could sell for more later. It’s: What would those additional net proceeds need to change for continuing to own and build the business longer to be worth it to you?
Before you turn down today’s opportunity, know what would have to become true for waiting to be worth it.
A Buyer Decision Review
After a focused 20- to 25-minute conversation, our team can begin a Buyer Decision Review.
You don’t need to have every number or transaction detail figured out before we talk. Estimates and ranges are enough to help you establish your Personal Financial Exit Number and estimate what the opportunity in front of you may actually provide.
If the offer appears to fall short, we’ll help estimate the potential gap so you can understand how much would need to change for a future sale to work financially for you.
If the offer appears to provide enough, but you’re considering passing on it and continuing to build the business toward a later sale, we’ll help you establish your Waiting Hurdle—how much more you would need to net for that choice to be worth it to you—and consider what those additional resources would actually change.
The result is a clearer view of your Personal Financial Exit Number, what today’s opportunity may actually provide, and, when relevant, your Waiting Hurdle.
If you could benefit from a conversation with our advisory team, we would be happy to provide a complimentary consultation.
Important Disclosure: Investment advisory services are provided by Beacon Pointe Advisors, LLC, an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This article is for informational purposes only and is not individualized investment, legal, or tax advice. Beacon Pointe does not provide legal or tax services. Consult your legal and tax advisers regarding your circumstances.