Business
Business advice from Griffins – Chris Duggan answers your questions
I am 60 years of age and am planning to retire in five years time. My business continues to be successful and we appear to be maintaining profits even in these hard times. I have been told to prepare an exit plan from my business but don’t know where to start. Michael
Dear Michael
It always surprises us how many times we meet successful business owners who do not have an ‘exit’ strategy.
After all the hard work to build up a successful business, it is logical to spend some time planning for how to maximise its value when the time comes to pass it on.
Whatever the reason for seeking an ‘exit’, the common theme for all business owners are the desire to maximise the value of the business.
Your exit can be planned by working through five key stages:
1. Identifying your objectives;
2. Identifying the obstacles to a successful exit;
3. What are the options;
4. Preparing the business for sale; and
5. Implementing the exit.
The first stage in the exit planning process is to determine your objectives as well as your capital and income needs following the sale. You may want to pass the business to a family member or reward a loyal management team.
Whatever your objectives, the reasons for selling should be thoroughly explored: is it the right time? What are the business’ immediate future prospects? Will its value increase or decrease over the next few years? Do you need to raise capital to live comfortably in retirement or are you already financially secure?
The next stage is to consider the obstacles to a successful exit. These can be many and varied. You can assess your business by using our Investor Ready Diagnostic on griffinscorporate.co.uk. This will enable you to carry out a review of your business by looking at it from an investor’s point of view. The review will often identify actions you need to take before the business is ready for sale.
Then identify the options for a successful exit. Although not an exhaustive list these may include:
n a trade sale;
n a management buy-out;
n going public on AIM or another public market;
n introducing a private equity backer;
n a purchase of own shares (often called a share buyback);
n passing the business to the next family generation
Whichever route is likely to suit your business you should plan your exit several years before you want to sell or retire. The strategy you should follow if, for example, a buy-out is your preferred exit route will be very different from the strategy you should follow for a trade sale or flotation and may take several years to put in place.
The best way to navigate your way through the ‘exit’ process is to take timely and complete advice from a suitably qualified professional.
n For more information and advice on exit planning contact Chris Duggan on 01189 235 020 or email on c.duggan@griffins.co.uk
More From: Business News Next Story: Chic furniture of the 1920s restored by Newbury company Previous Story: MWS launches video sessions for small firms