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Exit Strategy Planning

Exit Strategy Planning is a process which must ideally be started early in the life of the company and certainly no less than five years before planned exit of the owner.  Regrettably, too many owner managers leave it too late to think about exiting their business.  Why is this?  The reality is that exit is one of those difficult decisions that we would rather leave for another day.  It is an emotional subject which raises questions such as:

  • How much longer do I want to be in business?
  • How do I plan to leave my business?
  • What is my business worth now?

It is worth reflecting on the parallel of a Health and Safety Audit and the importance of knowing exactly where the exit is.  Somehow this concept can get missed by owner managers.

Up to now personal objectives and business objectives will have been the same.  However in getting the business ready for sale, it must take on a new perspective of making it attractive to a prospective owner.  This could mean the owner (s) becoming less pivotal in the organisation and putting a strong management team in place and dealing with short term, medium, term and long term impediments to sale. The aim will be to achieve a successful exit and eventually you will have to be dispassionate.  Put yourself in the place of the buyer who will look at the value that the business has rather than the owner.

This means that it is never too early to plan your exit - it’s all part of the business process. Think about your exit timescale, that is, are they short/medium/long term and this will dictate your exit route options.   Be cognisant of the fact that some reasons for exit are uncontrolled e.g. burnout or being told to retire. This means that in some cases timescales can range from immediate to 1-2 years, limiting the choices available.

Planning should identify and quantify the following elements:

  • Setting the planned succession or exit time frame
  • Identifying the optimum exit route
  • Resolving barriers to sale
  • Valuing the business
  • Creating the right management structure
  • Winning support from suppliers and customers
  • Deciding on the method e.g. Succession, MBO, MBI, Trade Sale, or even Liquidation
  • Writing the financial plan including payment terms, taxation and inheritance tax
  • Personal planning for the future
  • Negotiating the sale

Finally, remember to assemble your team of specialist advisers:  Bank Manager, Chartered Accountant, Solicitor and Morgan Potter Consulting Ltd, who will guide you through all the planning and implementation stages.

Call 07870 649207 or email info@morganpotterconsulting.co.uk

 

 

 
 
 
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