Even if you have no intention of leaving your business in the near future, it is important to consider your options early and have a business exit strategy in place. A business exit strategy is an outline of what will happen when you decide to leave your business.
When creating a business exit strategy, it is important to consider who will take over your business, how long your exit will take, if you want to remain involved in the business in some capacity or if there will be a transition period.
If you will make a profit from selling your business, it is important to discuss your plans and sale with a financial adviser in advance. A financial adviser can help you to work out the most tax-efficient way for you to take the profits from your business.
Merger and Acquisition strategy
Having an exit plan enables you to structure your business to optimise your return from your planned exit. For example, if you are planning on a merger and acquisition strategy, where one of your competitors buys your business, you should focus on ways to make your business more attractive to potential buyers. When you sell your business, your staff will also be acquired. You can boost the value of your business by hiring and retaining a core team.
Another way to make your business more attractive to potential buyers is to limit the number of stakeholders. Having only one or two key investors makes your business a more attractive acquisition as it is less complex.
Having a long-term financial plan in place will also show potential buyers the projected income of the business and create long term financial security. At Four Wealth Management, we offer a Small Business Financial Planning Service where a Financial Adviser will work with you to establish the goals of your business and create a financial plan for your business to help achieve these.
Alternative exit strategies
Other exit plan options include selling to management/employees, selling or transferring to a family member or liquidating your company.
Having a business exit plan in place may make it easier for you to secure funding for your business. Many investors rely on a successful business exit in order to receive a good return on their initial investment. Entrepreneurs are likely to be unable to secure funding if they do not include an exit strategy in their business plan.
The exit strategy that is right for you and your business will depend on a number of factors which may change throughout your career.
Plan ahead to make the most from your business exit
Planning ahead, even if your plans may change, is the best thing you can do for your business. There are a lot of different options available to you when it comes to an exit strategy.
Exit Strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place.