Once upon a time setting up a business was a journey intended to last a lifetime and be passed down to generations. Today, many business owners go in with the goal of selling as a form of exit. Naturally, the experience and goals of business owners are highly individual. The motivations for launching are equally as diverse as the reasons one will eventually decide to exit. In this article we’ll explain how to get the business exit you deserve – with no regrets.
The key to any successful exit is in the planning. This means giving it serious thought sooner rather than later. If you want to exit at the right time and the right price, you need to be in control of the process early on. Whatever the motivation for exit and whichever route you take, getting trusted guidance and support will ensure you exit with no regrets.
Assess your options
It will take time and consideration to determine the best steps forward. The options need to be thoroughly assessed to make informed, financially savvy decisions, and it’s advised that you do this with a professional.
You need to consider:
- The value of the business
- Financial and legal status
- Anything that needs to be fixed to make the business more appealing
- Suitable buyers/selling strategy
- Your exit goals – do you want to make as much out of the sale as possible? Do you want the business to continue and keep your staff? How long are you prepared to wait to achieve the right outcome?
- Which option, with all things considered, will be most fruitful and achieve your objectives.
Essentially, with every moving piece or new consideration, you want an assessment done to see what that step could achieve for you. All of this will need to be captured to produce a comprehensive overview of your options to make the most informed decision about how to move forward.
Determine your strategy
How you wish to sell, or who you wish to sell to, will determine what you need to do to prepare the business for sale. Unfortunately, that means you must form a relatively concrete plan from early on, but it’s never too late to start. Failing to have a firm strategy can risk time and money doing activities that take you in the wrong direction.
For example, one common preparation before a sale is to work on your business profile, ensuring that your business is attractive to potential buyers. If you did this and then later decided to sell off the business assets rather than selling the whole business (share sale), that would have been a lot of time and money spent on activities that weren’t necessary.
Strategies can change, but you want to reduce the likelihood of that happening to prevent financial loss in the process. Each of these steps are mission critical. Without the assessments, you can’t make informed decisions on your strategy.
Prepare the business for sale
If you do want to sell to someone to take over the business, you will need to address any legal or financial issues and work on the profile of your business, as well as how it is run internally. If you plan to sell off assets, you will need to do a stocktake of what is included in the sale process and categorise it ahead of the valuations. All of this planning is how to get the business exit you deserve.
Perform valuations
Business valuations should always be done by an expert with business exit experience, like us here at The MGroup Corporate Finance team. In this step, the business will be valued based on cash flow, revenues and profits, potential synergies, industry sector, and physical and non-physical assets. This information forms the basis of what is presented to potential buyers.
Engage buyers
This is two-pronged. First, you will need to find potential buyers, and then enter negotiations with them. This is, again, best done by corporate finance professionals to ensure these interactions are as productive and thorough as possible, cutting no corners. Your exit consultants will put together a comprehensive sales package tailored to the type of buyers you are seeking, and they will carefully control confidential talks to work towards a sale, negotiating on your behalf to fight for the best possible outcome.
Close the deal
Once an offer is acceptable, there is a 60-to-90-day period of due diligence when the buyer will put all of your business under scrutiny. During this process, your financial advisor can point them to the information that confirms XYZ information, answers questions about finances and tax, and ensures this period of due diligence runs through smoothly. This period would typically also include a legal professional, to cover any questions that may need to be addressed on that side.
Once complete, the sale is closed, and you’re free to move into retirement, take on your next venture, or even continue to have a role in the business.
Work with the Exit Board
Working in partnership with you and your business, the team at The MGroup Corporate Finance have designed a comprehensive exit solution called the Exit Board, to identify your goals, assess the exit options, and build an exit strategy that gets you what you want. This is done in three parts:
- Assessment: assess the business status, including legal and financial review, market demand, valuations and exit options
- Growth: introduce and recommend necessary changes to enhance the value, legal and financial situation, and future attractiveness to the market
- Exit: project manage the selected exit strategy, including collaboration with other skilled professionals to assist and execute the sale process.
How to get the business exit you deserve – Talk to an experienced advisor
Whether you’re in the early stages of considering an exit or have already embarked on the journey, talking to a specialist advisor can help you fully prepare and take advantage of the best opportunities. Contact Partners Mark Crossfield (07780 957631) or Geoff Pinder (07717 874357) for a confidential discussion and to find out how they can support your exit strategy.