Exit Planning & Strategies
As a business owner, it is vital to have a business exit strategy plan. You may have many reasons to exit your business other than retirement, such as the wish to try something different, extract the full value of your business, or pass to a new owner or family member. Even if you have no immediate reasons to exit, it is always useful to plan for the eventuality and there may also be stakeholders in your business who wish to exit for their own reasons.
A plan on how you will exit your business can take time to implement and so it’s important to think ahead. The advantages of planning ahead include the following:
- Allows better control of the process
- Gives time to consider preparing a second-tier management team to help facilitate your exit
- Helps to maximise the valuation
- Allows the exit process to be smoother when the time comes
There are numerous ways to exit a business - We briefly set out three primary options with the view to help you determine the most suitable one for your situation.
Option 1 – Sell your business
A trade sale or sale to an investor usually allows you to realise a fuller value upon sale. You need to decide what exactly is for sale: the shares in the business, or the trade and assets (this is usually less tax-efficient).
Having the right team of accountants and advisers on your side, working with you to make sure you get the best possible terms for your sale, always makes a huge difference to the successful completion of your transaction. The first thing we do is to review your corporate strategy with you; make sure that disposal is the correct decision; the corporate structure is optimised to secure the best value and to mitigate tax. We then project manage the whole process for you, from valuation and due diligence through to completion.
When selling a business there are many factors to consider – download our guide to step you through the sale process.
Option 2 – Keep it in the family
It may be your dream to keep your business within the family, but you need to consider the commercial implications of doing so. It's important to balance your emotions with reality. You need to consider both your management and ownership roles before coming to any firm decisions.
The best way to hand your business over to your family is to nominate a successor or successors from among your relatives involved in the business and in making your decision you must determine objectively who can best take your business forward. Clear communication with all family members is crucial to making any decisions.
Your successor(s) should have both strategic plans and a vision for your business, though, you may need to accept that these may be different from your own. Skills that may have helped you set up your business won't necessarily be the same as those needed to develop it further.
It can help to take advice on who is the best person(s) for the role from an objective outsider such as a non-executive director, business adviser or your accountant, who will also be able to advise you on potential tax implications.
Option 3 – Management Buy-Out
For an exiting owner, an MBO can offer an attractive succession plan, as there will be continuity of management and no requirement to disclose confidential information to outside parties. An MBO is an attractive option for businesses with retiring owners, a track record of profitability and a strong and motivated management team with a clear vision of the future direction for the business.
Whether you are the owner or the management team, the Jerroms Corporate Finance team can assist in navigating the rewards, risks and opportunities that an MBO can present. It is critical that you are professionally advised right from the start.
How can we help?
A planned exit is always preferable to one forced by circumstances. Your strategy plan should incorporate ways to boost the value of your business before exiting and we would advise that you always take professional advice. Our team have advised on hundreds of business negotiations and sales and with so much to consider and implement, we find our clients really appreciate the support and reassurance of working closely with such an experienced team.
Who should I contact I?
Our friendly team offer unbiased advice on the best exit strategy for you and your business and will support and advise you throughout the entire process. We have a wealth of experience having worked with a diverse range of businesses across many sectors.
Contact David Fletcher or Chasz Coulsting to find out more.
0121 693 5000
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