Looking to exit from your business in the next two to five years?
We can help you achieve the best outcome.

Looking to exit from your business in the next two to five years?
We can help you achieve the best outcome.

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An Exit Plan is not all about you

Exit planning. Who’s it for? The obvious answer is you, the business owner. If you want the best possible exit from your business, a good plan removes many elements of chance. It provides you with greater confidence in how the final stages of your business ownership will pan out and so puts you in a better position to make plans for what comes next. 

An exit plan will put in place the key steps and strategies to enable you to get access to the two precious things you have tied up in your business: money and your time. 

Most forms of exit take some planning. Yes, occasionally an offer out of the blue will come along which hastens your decision, but these are rare and even if they happen, they are often not on your terms. 

An exit plan is a must for business owners, but it is also important to other people – including your management team.  

It’s easy to assume that your exit involves a sale to another business. It might but even then, your management team will play an important part as a potentially vital asset for the acquirer. 

What might an early decision to invest and develop your team do for your exit options? Here are some examples: 

  • You would prefer not to sell your business but want to get back some of your time. Your ability to step back from a business having a high dependency on you will be enhanced the better your management team.  The more you have built their capability and confidence to run key aspects of the business the greater your opportunity to step back. 
  • You would like the ownership of the business to be passed to other family members. If you have a ‘parental’ approach to your team – including family members – you may be inhibiting their development such that when you want them to step-up, they don’t feel able or willing to do so. Sometimes the opposite situation exists where the daughter or son of the owner is put under undue pressure to step-up, for example before they are ready, because of their relationship with you. The family connection doesn’t automatically qualify them to take on the business – they need support and development too. 
  • You aspire to see the business taken on by the management team, for example through a management buy-out (MBO).  The better prepared they are to succeed you in running the business the better this option will turn out.  Furthermore, if you are looking to your team to invest in the business as part of the MBO they will feel more confident to put their own money in if they already have the experience of day-to-day decision making. 
  • The same applies if you are tempted to sell the business to an Employee Ownership Trust (EOT).  As with an MBO, the full value of the business is likely to be paid to the selling owner over a period of time. The better prepared is the team, the better the business will perform and so greater will be your confidence in getting your money. 

Another benefit of investing in the team is that it keeps your options open. If an MBO or EOT are potential exit options, then you will want the team to be as strong as possible. The beauty of this is that most acquirers, if you were to sell to a third party via a trade sale for example, will want a high performing business (or at least the potential thereof) and one that isn’t dependent on you. Your investment in your team will pay you back several times over. 

Similarly, if you want a partial exit, for example by selling some of your equity to an investor or business partner, your chance of success in attracting money and the prospects for the investment to meet target returns will be greater the better your team. 

It’s not all about you. You currently may be the central player in the business but most if not all exit outcomes will be both more likely to happen and more likely to meet your expectations if you take the time to invest in the development of your team. 

If you’d like to discuss team development as an essential part of your eventual exit, please get in contact with us. 

(Image sourced from Canva)

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Testimonials

Ian’s ongoing input has made sure that plans have not only been laid, but implemented, completed and analysed. Ian is an invaluable asset to our business.

Alistair Henderson
Managing Director, Tuplin

Downloads

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.