Exit Planning (Part 6): Growth and Cash Flow: Another Way of Building Generational Wealth

Exit Planning: Knowing When It’s Time to Sell Your Lower Middle Market Company (Part 6)

Growth and Cash Flow: Another Way of Building Generational Wealth

Your company is on fire – experiencing explosive growth and generating significant cash flow. Why consider selling now, when the future seems so bright? Because a strategic M&A transaction can unlock the true potential of your success and transform your cash flow into lasting generational wealth.

Selling a thriving company might seem counterintuitive. Here’s a different perspective to consider: M&A can be a springboard to build a lasting legacy for your family. In a previous blog, we discussed some of the advantages and disadvantages of leaving your company to your heirs, and this blog takes a closer look at the specific cash flow concerns some owners have when it comes to selling their company.

Structuring for Continued Growth:

There are ways to design an M&A deal that allows you and your heirs to share in the future success of your company:

• Deferred Payments and Earnouts: These strategies allow you to receive additional payments based on the company’s continued growth after the sale.
• Locking-in Value, Fueling Future Growth: You capitalize on today’s high valuations while positioning the company for even greater success under new ownership.
• Enhanced Retained Equity Value: Retaining some ownership in the acquired company allows you to benefit from its future growth potential. This can be significantly more lucrative than simply owning a stagnant business.

Maximizing Your Return:

A well-structured M&A can deliver a far greater return than simply holding onto your company:

• Multiplier on Equity Growth: For every dollar of retained equity, you might receive 3-6x the return when the larger entity is eventually sold.
• Limited Growth Return: Holding onto your company limits your return to a dollar-for-dollar reflection of its future growth, without the multiplier effect.

Align: Your Partner in Building Legacy

At Align, we understand your desire to see your company reach its full potential. We help you structure an M&A transaction that allows you to:

• Secure a substantial upfront payment.
• Benefit from your company’s future success through creative deal structures.
• Create a lasting legacy for generations to come.

Contact Align Today

Don’t let your company’s growth limit your financial opportunities. Let Align help you unlock the true value of your success and build a future of generational wealth. Contact us today to discuss your exit strategy and create a plan that maximizes your return.