Exit planning - the biggest transaction?

In collaboration with Matt West at Metro Bank, with special guest Jason Milkins from Roxburgh Milkins, we hosted a roundtable looking at how to successfully plan your exit from your business. COVID-19 has had a huge impact on business owners, influencing many to start thinking about their Exit Strategy now. Long standing owners and business leaders are struggling with whether to scale down their business or expand and create a legacy before leaving.

The most important question business owners can ask themselves is what do they want from retirement? Do you sell your business to a trade competitor? Do you want to exit completely? Does your business have the capacity to expand? Who would have an interest in buying your business? Is it going to be passed on to a member of the family? All these questions will influence your exit strategy.

There are several ways you can exit. With a traditional management buyout (MBO) you can let your management team buy your business. This creates a smoother deal, and you know you’re leaving your business in capable hands. If you are unsure that the company will survive without you, you can exit slowly, easing the next generation into the role. If you have no desire to sell your company, you can strip it of its assets and wind the business down. The biggest thing to ask yourself is what do you want and when do you want it? Figure out your goals and plan and prepare. Look at where you are now and where you want to be. It all comes down to planning and timing to help make a smoother, more successful transaction.

Jason advised that it is wise to seek out professional advice to understand how to get the best value/price for your business. You should be able to get a valuation, but you must also be careful with who you go to - make sure you trust the person or company you are choosing. Financial advice ultimately helps business owners understand their bottom lines. Once you have set your goals, do not stray from them. You have to be brave enough to walk away from a potential buyer if you are unhappy and not able to get the deal that you want.

When preparing for a sale, look at your company from the point of view of a buyer. Any small problems that you see, deal with them, get your house in order, get organised and make sure that all accounts are aligned and presentable. Make yourself desirable. If not, it could affect the buyer’s decision, the process can become drawn out and you may end up having to lower the price. A business is only worth what somebody else is willing to pay for it.

It is important when exiting a business, to make yourself redundant to the business. Ensure no value is lost by you leaving. Share your knowledge and expertise. If you are the main point of contact for clients, pass the reins on and train up your team to take your place. Clients and staff may be relieved because it reassures them that your company will survive without you. If you remain vital to your business, the exiting process will be long and tiresome. If in doubt, bring more people on so you are no longer essential. It can be hard to let go of something you’ve worked so long and hard for, so you need to have faith in those taking over that they can run the business as well as you.

Exit planning can be a complicated process, but with the right preparation, having trust in the future leaders of your company and setting sensible goals, you should be able to achieve a smooth and painless exit.

It is never too early to start planning your exit strategy. Is your business ready for your exit now? Why not complete our Business Health Check and Brand Clarity Scorecard to find out where you are now. For insights, guidance and a free consultation contact hgkc today.

hgkc was born from the realisation that together our combined practical experience and knowledge can offer our clients a broader, deeper and richer experience that will deliver better results faster.