Accountancy

Business Exit Strategies

An exit strategy is not something that should only come up on the radar the moment a business owner decides to move on. The chances are, most entrepreneurs have the future of their business at the back of their minds from the early days.

So whether it’s a sale for health reasons, or you are just considering your options down the line, knowing your choices is half the job.

There are a number of different ways that you can exit a business. And how you do it all depends on what is most suitable for you. Your age and health, along with personal needs are some of the obvious considerations. But there are many other factors like the industry you are in, governmental and regulatory policies, as well as where we are in the economic cycle.

Kirk Rice will work with you to establish which is most beneficial – helping you stand back and look at the whole picture. We have many years of experience advising businesses on how to maximise their value.

There are two main options available when you are looking to exit your business:

• Sale

One option is to sell your business outright to a third party. Getting a good price will inevitably be one of the key considerations for an owner-manager selling their business. Planning early is crucial in achieving this.

The owner-manager will need to demonstrate that their business’ performance is healthy, and that its growth trend is pointing in the right direction. Firstly, potential buyers will be keen to see evidence of a strong management team. This shows a company is capable of performing well once the owner has left. But Kirk Rice will also help you demonstrate your company’s operational quality. We will demonstrate to potential buyers that they are buying a tightly-controlled business (with a clean tax profile).

We will also help demonstrate things like a good brand image and market profile – building proof that your company is able to attract the right kind of customers.

• Management Buyout (MBO)

You might also consider selling your business to an existing management team. There are of course benefits to this – like knowing that you are leaving everything you’ve worked hard to build in the hands of people you trust.

Sometimes though, existing management are not able to pull together sufficient financial resources to buy the business. So the price you obtain may be lower than that for an outright sale to a third party.

Another option is to lock in the existing management. This can be done by offering small chunks of your company’s shares over a period of time. Doing it this way means that as an owner, you can divest your interests while keeping a degree of control. With a good team of people behind it, you could unlock more value from your business than by making an outright sale.