Planning Your Exit

When you’re planning your exit, there are usually several reasons which typically are:

  • Shareholders/directors of a private company looking to retire or realise wealth
  • Irreconcilable differences at board level
  • No obvious successor to take over
  • Groups wishing to dispose of a non-core business
  • MBO/MBI teams looking to exit to realise wealth for themselves and other investors

Here are a few options available to you when thinking of selling your business:

  • Partial sale
  • A trade sale
  • A Management Buy-Out (MBO)
  • A Management Buy-In (MBI)
  • Financial Restructuring
  • Some share capital bought back by the company
  • Prepare management to run business and change your role

The best way forward when planning your exit / thinking of selling your business is an appraisal conducted by a respected firm of advisors. This appraisal should enable you to judge the best route. Typically this appraisal will include the following:

  • Assessment of the value of the business
  • Noting your personal objectives and timings
  • Presenting the business to maximise value
  • Identify and predict problem issues
  • Consider all alternatives
  • Develop an action plan

With this information to hand, a better judgement will be made of the various options of planning your exit. In general the best time to sell your business is:

  • When you are on a high
  • Feeling confident
  • You don’t need to do it

However, this is not always possible and it is important to consider, above all, your own personal well-being and your family. If you are feeling that it is time to exit you, and only you, know the depth of your feelings. The best route is to seek professional advice. Sometimes just talking it through can restore your perspective and show the way forward.

How to appoint an advisor and what questions to ask

When planning your exit, you must make sure you do thorough research since a bad choice can be costly and timely. Ensure you ask the right questions:

  1. What experience do you have in my industry sector?
  2. How many businesses have you sold in the last 18 months?
  3. Can you supply references?
  4. Who will be doing most of the work?
  5. What is your marketing strategy like?
  6. Do you attend all meetings with prospective buyers?
  7. Do you offer unlimited support?
  8. How are your fees structured?
  9. Do you hold any professional qualifications?
  10. Are you a broker or an adviser?
  11. Do you attend all introductions and facilitate negotiations?

Are you prepared for sale? What you need to do…

Like most things in life planning is vitally important. Never more so than when planning your exit / thinking of selling your business. Here are a few key pointers to help you “Plan the Exit”.

  • The best time to sell your business is when you are bullish and don’t need to.
  • Time your run to suit the economic cycle and when your debt is low.
  • Audited accounts are preferred by acquirers.
  • Try to get three years growth in sales and profits as you exit.
  • Remember Vendor Due Diligence. This is where you have a checklist of “things to do” so that you are well prepared in advance.
  • Ensure that you are not irreplaceable. This can concern acquirers

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