Exit planning is about understanding your options and creating greater control over your future
In building a business, there are many things you put into its development and growth, but when it comes to an exit the focus is almost always on money. That’s why, for many people, an exit plan is synonymous with an intention to sell – but it doesn’t have to be that way.
At Henchards we focus on both the business and the owner: preparing the business for its next stage and the owner for theirs – whether that means a sale, retirement, a new venture or continued ownership with less involvement.
An exit plan is about creating options. You may ultimately sell the business or reduce your day-to-day involvement while retaining some or all of your ownership, or take a different route altogether.
Knowing where you are now
It isn’t unusual for a business owner to be a little hazy on what their business is worth. Some people are very optimistic, some pessimistic and some will have put little thought to the matter.
The earlier you understand the gap between where you are now and where you want to be, the more opportunity you have to make changes that improve the likelihood of a successful outcome.
A Henchards business review considers the factors that may influence the value and attractiveness of your company to an acquirer. Our approach is to view your business as if through a potential buyer’s eyes.
This review also anticipates the enquiries a buyer may make during their due diligence process, allowing you to prepare the business and put yourself in a better position to counter price reductions and onerous sale conditions. The resulting improvements can benefit the business whether or not you have an early sale in mind.
Your exit may not look like you expect
A common starting point with clients is a clear statement of intent – for example, I want to sell this business in five years’ time for £3m. But as the exit planning process develops, a new intention can emerge where the ‘exit’ is less about selling and more about a reduction in day-to-day involvement.
The owner gets their time back but retains some or all of their ownership, with the prospect that their wealth will continue to grow.
The two primary factors in how you make your choices are time and money. You can separate your objectives for realising wealth, i.e. selling, from your objectives around how you spend your time. An exit doesn’t have to be a one-off, all-or-nothing event.
We all want to get a fair return for the effort and successes in building a business. The earlier you understand where you are and what you want from your exit, the more opportunity you have to shape the outcome.
If you’d like to explore your options and get a clear idea of which type of exit might suit you over the next two to five years, feel free to book a complementary conversation.