If you are a business owner thinking about how to exit your business, you’ll need an exit strategy in place to ensure maximum sale value and a smooth transition. The MGroup Corporate Finance team are on hand to support you through the process.
Exploring an exit strategy and thoroughly planning your departure puts you in control of your financial future. Making key decisions early will give you certainty that the value of your business will be maximised and ensure you’re ready to move the process along smoothly.
How to Exit Your Business – Strategy
An exit strategy is a plan to divest or transfer ownership of a business where the owner no longer has a financial or legal interest. It can be one of the most important pieces of financial planning for a business owner looking to move away from a business, in order to start a new project or retire comfortably.
Why is an Exit Strategy Important?
For many business owners, selling to a trade buyer is the ultimate objective. However, you might also want to consider selling to your existing management team (Management Buy Out), selling to a private investor (Management Buy In), or undertaking employee ownership. Each of these options involves detailed preparation and execution and it is well worth considering what is best for you in plenty of time so you can plan accordingly.
Planning an exit strategy should ideally start at around 18-24 months before the intended exit date to allow for sufficient preparation. Whichever exit method you decide to pursue, giving yourself and the business time to gear up for change will give you a greater chance of a successful outcome. That said, if you can get your house in order swiftly, you could find yourself exiting sooner than anticipated.
How to Exit Your Business – Preparation
Our ‘Exit Board’ process will differ depending on which method you choose, but the preparation required for a smooth transition includes:
- Who, What, When – You need to decide if you can be replaced in the business, and if so, by whom? Who will take over? Perhaps an existing team member or external contact, or perhaps you’ll need to look for a new buyer.
- Business Health Check – Time to undertake a review of all staff, contracts, legal issues, financials, tax, and inventory. Having easy access to relevant documentation and well-prepared accounts will make the process of due diligence much quicker. Similarly, if you need to find a trade buyer, being prepared before approaching the market could be the difference between a successful sale at the right price and last-minute price chipping or even deals falling over.
- Business Value – When considering an exit, personal wealth will be a key factor. Are there ways to maximise the value of your business prior to exit? For example, building out the senior management team, reducing dependence on one or several large accounts, focusing on building recurring revenue streams, or introducing new service offerings.
- First Impressions – If you do opt for a trade buyer, you’ll need to allow time for preparing marketing materials that will present your business in the best light. You will also need time to research and target potential buyers.
Talk to an Experienced Advisor
Whether you’re in the early stages of considering an exit or have already embarked on the journey, talking to a specialist advisor can help you fully prepare and take advantage of the best opportunities. Contact Partners Mark Crossfield (07780 957631) or Geoff Pinder (07717 874357) for a confidential discussion and to find out how they can support your exit strategy.