Preparing Your Business For Transition1

Topics for Session The Importance of Planning Your Exit

Strategy in Advance Set the Right Expectations when

Planning to Sell Your Business Implementing Your Exit Strategy Understanding the Sales Process Understanding the Transfer Provisions

and Transfer Documents Transitioning your TAB Business Resources

EXIT STRATEGY

The Importance of Planning Your Exit Strategy in Advance

Impacts your business plan Impacts what you do next and your personal

vision Allows you to manage your business to your

exit plan and make adjustments when necessary

Proactive v. reactive Allows you to build your business in the ideal

shape for your exit option Allows you to groom successors if coming from

within the business Allows you to choose when you exit

Set the Right Expectations when Planning to Sell Your Business

Purchase price Determining the value of your TAB

Business from your perspective Determining the value of your TAB

Business from your buyer’s perspective Timing

The structure of a deal can impact timing

How long does it really take to sell

Industry Statistics for Selling a Business

Key Points of Exit Strategy Planning

Plan well in advance - value is optimized when you are proactive rather than reactive

Align your day to day operations with your exit plan

To optimize purchase price, know what your ideal buyer values and build that value

Be realistic on timing- over 80% of all businesses take 9 months to 2 years to sell

Implementing Your Exit Strategy

Step One – Evaluate your TAB Business Is your financial house in order?Measure key metrics and performance

indicators and know how to communicate your KPIs to a buyer

Is it all about you?What is your Net Promoter score?Are you effectively using all the assets

available to you?

Implementing Your Exit Strategy

Step Two – Prepare your TAB Business for sale Improve areas of weakness Continue to focus on the day to day

operations

Implementing Your Exit Strategy

Step Three – Communication With TAB

(Resaleteam@thealternativeboard.com) With TAB Members (be careful here)

Timing Transition Plan

Key Points to Exit Strategy

Assess your TAB Business early so you have time to shore up your strengths and address the weaknesses

Integrate the TAB tools into your business operations

Stay focused on the daily operations of your business

Utilize the Business Navigator Communicate with TAB If your business is underperforming, consider

competitive pricing and terms11

THE SALES PROCESS

Understanding the Sales Process

Locating a prospective buyer The inside sale

Partners and Contract Facilitators Fellow Facilitators

Third party buyers Your network Broker networks

Types of Sales

Traditional sale Partner model Contract Facilitator model

Understanding the Sales Process

Introducing a buyer to the TAB Business and TAB System The current model The TAB sales process

Qualifying the buyer Franchise Disclosure Document Questions on the franchise agreement Waiting periods under the FTC Rule

15

Understanding the Sales Process

The TAB sales process (continued) Attending a TAB Board meeting Discovery Day Validation Territory considerations

Understanding the Sales Process

Available Support TAB’s enhanced re-sale support Area Developer support

Understanding the Sales Process

Preparing your business for due diligence Be organized Have a confidentiality agreement in place first

Key Points of The Sales Process

Know the system that the buyer is joining Review the Value from TAB spreadsheet The buyer must meet TAB’s current

qualifications Communicate with TAB to facilitate a smooth

transition through the TAB sales process Respect your fellow franchisees when

commencing the validation process TAB’s enhanced support is available to assist

you through the process

TRANSFER PROVISIONS AND DOCUMENTATION

Transitioning your TAB Business

Transition plan Learning and introductory phase The mentoring phase Passing the torch phase

Survival provisions in your franchise agreement

Understanding the Transfer Provisions in Your Agreement

Compliance TAB’s consent Buyer qualifications TAB’s right of first refusal

The Transfer Documentation

Three agreements Buy sell agreement New franchise agreement Transfer and termination agreement

The closing

Payments Payments to you

Purchase price Receivables

Payments from you to TAB Required fees (i.e. transfer fee) Optional fees (i.e. re-sale assistance

fee, broker fees) Payments from your buyer to TAB

Training fee Marketing fee

Key Points for Transfer Provisions and Documentation

Well organized due diligence process can help you counter any buyer skepticism

Have a confidentiality agreement in place before disclosing your business information

Your buyer will not be assuming your franchise agreement and only TAB can negotiate the terms of the new franchise agreement

Your closing will be subject to the 14 day and 7 day rule under the FTC rule

The purchase price is paid to you

Resources

Take advantage of the re-sale support Resale Manual

This document is located on the intranet in the Library under Running Your TAB Business and the folder titled Exit Support

Re-sale Team can be reached at resaleteam@thealternativeboard.com

Area Developers

Questions?