With the cost of living hitting businesses hard, owners may be looking to sell their businesses but they must give careful thought to their exit strategy to maximise their investment.
Building a successful business isn’t easy, it would be a shame to compromise years of hard work by failing to plan – resulting in a reduced purchase price; onerous indemnities or adverse tax implications! Making sure that you have the right structure and that you prepare the business for your exit can avoid these risks.
There are various methods that you may use to implement an exit. Some common examples include:
- Share sale to a third party buyer
- Share sale to an existing management team or the employees
- Sale of the trading business and assets
- A share buy-back
Each of these strategies has its own merits, risks and complications. In order to successfully exit, you need to ensure that you have the right strategy for your circumstances, you fully understand the implications for you and that it is properly implemented. Some mechanisms have very specific rules and you need to ensure due compliance to make sure that you don’t fall foul of the relevant legislation. The team behind your exit therefore can be instrumental to your success.
Preparing your business
Whichever exit route you pursue, there are steps that you can take to streamline the process and ensure that your business is ready. One of the primary considerations in the early stages of planning your exit is ‘getting the house in order’. This may include:
- Ensuring robust contracts and procedures – whether property, employment or terms of business with customers and suppliers
- Diversifying the business and minimising reliance on small numbers of key customers
- Ensuring robust financial management, including periodic management accounting and rigorous credit control processes
- Re-structuring management to reduce reliance on you, allowing the business to thrive following your departure making it more attractive to a prospective buyer
- Gathering key documents so that you’re prepared for the due diligence process.
These steps can help you ensure a quicker and more efficient sale, giving the buyer confidence that the business has been diligently and efficiently managed whilst reducing your risk and exposure.
Here at Wilson Browne Solicitors, we regularly advise clients considering an exit from their business. If you are considering an exit from your business, we would be delighted to have an initial discussion with you to explore how we can support you.
Company & Commercial Trainee Solicitor
Wilson Browne Solicitors