How To Achieve A Successful Business Exit

At some stage every business owner will need to plan their exit. The route taken will depend on personal priorities and ambitions but having invested an immense amount of money, time, and emotional energy into building the business, it’s vital to choose wisely to secure the most favourable outcome.

Some business owners make a career of founding, growing and selling companies but for many they will invest their entire life into one firm so will have no prior experience when it comes to exiting.  At Secantor, we provide exit strategy consulting to support business owners as they plan the next stage of their lives. With extensive experience of assisting them to achieve a successful exit, we can help you to design a bespoke business exit strategy that gives you the optimal outcome and provides your business the best chance of future success without you.

So, what steps can you take to optimise your exit?

1. Start To Plan Early.

Whilst many business owners often think or even dream about a successful exit, few make a proper plan early enough.  Maximising the success of your exit relies on building value in your business (see point 3 below).  This involves developing all aspects of your business including: management team, sales, profits, balance sheet value, brand, operations and leadership.  Invariably this takes time, carefully planning and clear actions to make the necessary improvement.  In reality, unless your business is already performing optimally without your involvement on a day-to-day basis it will probably take a minimum of 3 years to prepare for a successful exit.  It can be done in less time but you might not achieve the best results. You should carefully consider:

  • The timescale for your exit

  • Your aims and ambitions for the exit strategy.

  • The key steps you will need to complete to achieve your goal.

Assessing the final point above can be very difficult without expert help, particularly if this is your first business exit.  An independent expert will ensure you have everything covered giving you peace of mind.  Considering the value of your life’s work is at stake, this is a very worthwhile investment.

2. Consider All The Options.

There are numerous ways you can successfully exit your business, but not all will suit your exact needs or ambitions. Common exit strategies for business owners include:

  • Transferring ownership to your family.

  • Trade sale

  • Private Equity Investors

  • An employee or management buyout.

  • Share Sale to an existing business partner.

  • Ongoing Ownership but stepping back and relying on a management team to run the business day to day.

  • Liquidation.

The best route to take will depend on your objectives. As the decision and way of achieving it can be complex it is very helpful to consult with an exit strategy consultant who will explain the options and help you narrow them down.  Ultimately you may develop a plan that includes several alternatives leaving you more than one possible route that you can decide on nearer the time.

 
 

3. Focus On Building Value.

Preparing for a successful sale is all about building value in your business.  This means developing value in your finances, brand, operations and leadership team.  If you are selling, the price you achieve will depend on how much value you have built.  Crucially for many SMEs this includes ensuring that your business runs well without your involvement. This means building a strong management team to run the business after you have left. If you are passing on the business to family members, building value is also about good succession planning to prepare them well for the responsibilities of owning and running the business.

Here are some of the many ways to build long term value:

  • Achieving consistent growth over a reasonable period of time, typically 3-5 years minimum.

  • Achieving consistently improving financials including sales, profits, cash and balance sheet value.

  • Building brand loyalty to secure long-term custom.

  • Increasing net assets.

  • Investing wisely in plant, people, intellectual property, marketing, and company acquisition to achieve an optimum Return on Investment (ROI).

  • Excellent working capital management.

  • Optimising operational efficiency.

  • Strengthening the management team.

  • Ensuring the business isn’t reliant on you after transfer of ownership.

4. Firm Up The Details As Your Exit Nears.

Obviously as you approach your business’s transition date, you will need to firm up the details. You will need expert professional help to value and market your business to maximise its value. This is a specialist area and Secantor can introduce you to trusted professionals who will guide you through the process including helping you to select the most suitable approach.  

5. Leave A Lasting Legacy

Having worked tirelessly to grow your business you will want to make sure that your legacy lives on.  If your family are inheriting the business from you, careful succession planning will ensure that they are fully prepared to continue where you have left off which might include putting in place independent support in the form of a Non-Executive Director (NED) to provide confidence and stability.  If you are selling your business, the new owners are likely to want your ongoing involvement for a period of time, often in a consultancy capacity to ensure a smooth transition is achieved.

Ready To Start To Plan Your Exit Strategy? Contact Secantor Today

If you would like to benefit from our expertise when planning and carrying out your exit plan, please book a call with one of our experts at a time that suits you.

 
 

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