Business exit strategy

When entrepreneurs embark on their new business venture, typically they will have a solid idea, a good business plan and a well mapped out path to profitability.

But most only have the vaguest idea about how they might eventually sell their business. It may surprise you to know that the best time to start thinking about a possible exit is at the beginning.

Different exit plan strategies

Having an exit strategy can have many meanings and types – it doesn’t just cover the scenario of starting a business with a view to growing it to a size and value where you sell out. Types of exit can include: -

• Family business succession
• Death or serious illness
• A staggered exit based on gradual dilution of ownership starting with new investor coming in to provide growth
• A defensive exit – for example where the business starts struggling and you perhaps have given personal guarantees for borrowings
• Management buy out or buy in
• Selling parts of the business in stages in which case a group company structure might be useful from an early stage, such as intellectual property rights in a different company from other aspects of the business.

Other considerations

When considering your exit strategy, it is important to consider due diligence and confidentiality aspects of a potential sale.

Make a plan

Exiting your business is inevitable. It will happen whether you’re in control of it or not. So, make a plan now and start getting your business ready for the next owner. It’ll help you command a better price and increase the chance that your business survives.

And remember that anything you do to benefit your future buyer, will also benefit you. You’ll have a more efficient, profitable and easier to manage business.

It’s never too soon to build a business exit strategy. Give George Skelton a call or email to discuss our expertise and how we might help you reach the best and most cost and tax efficient decisions.