Each year, several business owners consider selling, but many are not prepared and do so. With the right process and systems in place, you can achieve a high price, and mitigate the risk of the sale falling over.
In this article, we discuss what you need to put in place before you start to put together your business exit plan.
Your business exit plan should include all key working advisers in the process:
Not having clean financials and normalised accounts ready to go can cause significant delays when preparing the business for ultimate exit.
Any business exit plan should have a clear goal having clean and normalised accounts. Most business owners tend not to think about this aspect too much, because most businesses do not have prospective buyers looking through their books.
Another area where business owners can ensure they have a strong business exit plan strategy is creating and articulating a medium to long term business strategy document.
This area usually receives less day to day attention from most business owners. In our experience, having a document prepared that encapsulates the business strategy will be well received by any potential buyer looking to invest in or acquire the business.
Broadly speaking, there are a few options when it comes to an exit strategy plan:
This is one of the most favoured business exit strategies for a lot of businesses. If you keep a keen eye on the industry, you can often gain a competitive edge on the market, putting yourself in a better position ahead of a sale. We pride ourselves on knowing who is active in each industry and are experts in finding the right buyers for our clients.
This is often most commonly associated with family businesses, but can often come from a staff or management buyout. These can take a lot of planning, and can come with their own unique issues - particularly where families are involved.
While an Initial Public Offering is a glamorous way to exit your business, it's not the best for most. An IPO can be a costly and lengthy process so having the right advice before to going down this route is important.
Most business owners understand that a new owner can't just walk in and take over without an appropriate handover period. Taking this into consideration when planning an exit is vital. It gives the incoming purchaser and team comfort that the business will have continuity over the transitional period; which can be up to 18 months.
Management and staff are integral to an ultimate business exit plan. While most buyers want to only meet the top 2 or 3 executives, knowing that the key people will be retained will help create long lasting value.
Before selling the business, ensure you put the following into place:
As part of our business exit plan strategies, we often ask business owners to consider:
Such simple questions help define how integral the owner is to the business from an operations perspective.
Lastly, and perhaps most importantly, give yourself time to prepare the business for sale. Things change in life and business, which are sometimes out of your control.
We tell all our clients to expect the business exit process to take anywhere from 6 to 12 months once you start, which means you should be preparing for the business at least 18 to 24 months out of your desired date to ultimately sell.
Similar to executing any plan within the business, a rushed business sale process will not yield the best results.