In the first two phases of exit planning we review what you want to achieve from your exit and consider the needs of other shareholders and stakeholders, who may have different perspectives and timescales to you. The next step is to assess your business to establish the likelihood of you achieving your desired outcome.
It’s not unusual for a business owner to be a little hazy on what their business is worth. As in most aspects of life some people are very optimistic, some pessimistic and some have put little thought to the matter. Whatever you are planning to do ‘post-exit’, be it retirement or a new venture, the value you achieve from your shareholding may be critical to your next stage of life.
Understanding what you want to achieve and being realistic about your business’s chances of delivering it for you is a key step – and the earlier you understand the potential gap the more chance you have of making the changes that will increase the probability of a successful sale.
The third part of the exit planning process takes the outputs from parts one and two and considers your current business performance. In short, you have set out what you want to achieve and considered the requirements of other shareholders. What happens next is the need to review the current trajectory of the business to see if it will deliver what you want at the time of your exit.
A thorough review covers all aspects of the business that are relevant to a successful sale or transition of ownership. It also looks at the additional factors that may be important to a potential buyer – and which may influence value and attractiveness. You may have a potentially valuable business but if to a potential buyer it looks problematic, disorganised and full of risk a successful sale outcome becomes less likely. Our approach to this is to view your business as if through a potential buyer’s eyes – their opinion on value is far more relevant than yours!
In addition to this business review we will also talk to you about running a due diligence review on your business. This is a valuable exercise that anticipates the enquiries a buyer may make and enables you to prepare your business in such a way that enquiries are handled swiftly and appropriately – this aids the sale process and puts you in a better position to counter price reductions and onerous sale conditions. What’s more the resulting improvements you make help your business whether or not you have an early sale in mind.
Once part three is concluded we will know where we are and understand the work needed to build the business over whatever timeframe meets your desired outcome. Part four (next article!) is about putting in place the plan to close the gap, if there is one, to put you on the path towards your exit with greater certainty and confidence.
If your future depends on achieving the right exit when you step back from your business this process will be of interest to you. Contact us to find out more.