One reason for considering an exit is that your business has plateaued. You may have had a good run building up the business, perhaps over many years, but have now hit a ceiling. It’s a frustrating place to be – what worked in the past no longer seems to give the same results; you can see plenty of opportunities but can no longer find the formula to turn them into success.
There may be many reasons for this stalling of business growth: misreading the market, failure to refresh products or services, pricing that no longer reflects the value offered, suppliers tightening their terms of business, unproductive team members, the wrong skills sets, not keeping abreast of industry movement and developments, or perhaps you’ve just got tired.
When you start a business the excitement and optimism often overshadow the need to plan for a potential exit. When a company has multiple shareholders, agreeing on an exit strategy becomes more complex because of individual ambitions and shareholders’ expectations from the business.
However, a well-thought-out plan is essential for long-term success, a smooth transition of ownership should one or more shareholders wish to sell and to maximise the value of the business for all involved parties.
The presence of multiple owners can make exit planning a more complex and tricky process than with a single or majority shareholder. In principle the same steps are required – understanding the shareholders’ personal requirements; determining what the business...
This month marked 11 and a half years of hosting the Henchards business lunch. No big deal in terms of landmark ‘anniversaries’ but nonetheless a notable event. The reason – yet another reinforcement of the power of association.
One of the often-mentioned words in exit planning is ‘legacy’. If you have owned and built a business over many years understandably you may feel the desire to leave a mark after your tenure of that business has come to an end.
You put in place an exit plan because you want to sell your business – hopefully for an attractive price that sets you up for what you want to do next in life. At least, that’s one scenario. If that is your objective then a good exit plan will help you prepare the business for sale, identify ways to find buyers and ensure the business is in the best shape possible for a successful outcome.
However, what if you are not interested in selling but do want to step-back – is an exit plan still relevant?
Selling your business is no different to any other sale in that it has both objective and subjective aspects. To get the best outcome from your business exit you need to work on both.
A potential acquirer of your business will look both at the facts and the story you tell. Different acquirers will place different emphasis on each. Business sales and valuations are assessed by various factors such as assets, financial record, risks and potential. The first two are pretty clear – they are what they are (or should be although different methodologies may result in different valuations). The second two, risks and potential, are more open to influence by ‘the story’ you tell. This story telling has a bearing on an acquirer’s perception of how ‘attractive’ your business is and how easy might be the purchase and integration.
How often have you received an approach from a company proclaiming they can sell your business?
Perhaps it offered you a place at a seminar or a ‘free consultation’ with an expert in valuing your company.
Where did the letter or email go? Was it set aside because one day it may be useful, or put straight into the bin?
The business of selling businesses is, well, big business. The key point to recognise is the difference between being ready to sell and being ready to plan your exit. There is a big difference in timing and the steps you need to take.
As a business owner you face multiple decisions every day – some routine, some forced upon you and some because you want to change or improve an aspect of your business. Sometimes alone, sometimes with your team and sometimes with external advice you make many decisions to improve your business performance so that at some point you can reap the benefits when you exit.
What does it take to take on the ownership of the business you work in? Is prior experience essential? If you’ve not owned a business before, can you ‘learn on the job’?
If you are fortunate enough to have an opportunity to become the owner or part-owner of the business you work in, should you take it? What might the current owner consider in formulating their decision to sell to the management team?
We’ve written a number of guides on selected business subjects that will set you and your business in good stead for whatever future you may choose.
These are free for you to download and to make use of in your business, so please help yourself.