Exit Strategies for Business Owners

There are various reasons why company or business owners might choose to consider an exit, including the following:

• Retirement
• Poor health
• Succession planning, perhaps to other family members
• A desire to simply step back from the business
• A desire to see the business evolve and grow in a new direction under alternative ownership and leadership

Potential exit strategies for business owners commonly include the following:

• A full or partial share sale to a third party buyer
• A full or partial share sale to an existing management team (typically known as a management buyout)
• A sale of some or all of the trading business and assets as a going concern

Whichever exit route is ultimately chosen, there are various steps that business owners can consider taking to simplify and streamline the process, including the following:

“Getting the house in order” by, for example:

• Regularising customer and supplier contractual arrangements
• Diversifying the business and minimising reliance on small numbers of key customers
• Regularising property occupation arrangements by ensuring that leases or other tenancy agreements are formally documented
• Regularising employment contracts and associated employment policies and benefit schemes
• Ensuring robust financial management, including periodic management accounting and rigorous credit control processes

Although the above steps represent good management practice generally, they are particularly important when considering a potential exit for the following reasons:

• Giving a potential buyer confidence that the business is efficiently and diligently managed
• Creating efficiencies in the legal and financial due diligence processes undertaken by a potential buyer as part of an exit process
• Maximising the value of the business to a potential buyer
• Streamlining the exit process generally

Building your trusted advisory team, including, for example:

• Legal advice
• Financial planning advice
• Corporate finance advice
• Accountancy and business valuation advice
• Specialist tax advice
• Potential engagement of a business sales agent

Acting early and planning ahead with the benefit of appropriate professional advice.

The Company and Commercial, Commercial Property and Employment teams at Wilson Browne Solicitors regularly work together to advise clients considering an exit from their business, both in the planning and preparatory stages, and in the exit process itself.

Read this article on the importance of succession planning

If you are considering an exit from your business, either in the short or longer term, we would be delighted to have an initial no obligation discussion with you to explore how we may be able to assist. Please contact the corporate commercial team on 0800 088 6004 or fill in our online form