Strategic Exit

Will you exit your business?

A strategic exit is something that every business owner will face. Even if you are a sole trader as opposed to a multi-owned business you need a plan. You may have already decided to exit your business.  This may be due to retirement or a succession plan.  Alternatively your market may have changed or your business has started to make losses.  You may have sold part of the business and you wish to release your remaining capital. Perhaps there is insufficient working capital or future investment to maintain your business’s viability.

Market changes

Has your market changed slowly or unexpectedly? Has your product or service demand declined?  Are you facing substantially reduced turnover? Is the competition – particularly online, disrupting your market? Have you kept up-to-date with digital transformation/technological advancement?

If you operate in an environment demanding statutory compliance, significant changes in legislation can impact your business sector, e.g. reduction of government subsidies; changes in health and safety; or licence obligations.

What are the benefits of planning your exit?

Addressing your business exit requirements at an early stage will enable you to:

  • Maximise the conversion of sales and work in progress to cash
  • Ensure you obtain the correct value for the business and its assets
  • Determine a proper plan to wind down your operations effectively, maximising income and managing essential costs
  • Assess whether the business can meet contingent liabilities, including staff redundancy costs
  • Create a tax efficient exit plan

What you need to consider

5 key options you will need to consider are:

  1. Merger and acquisition – have you identified another business to join where a merger is an exit solution. Have you identified another business that would add value to your business? is there a prospect of a bigger company taking your business over? Success can be achieved where businesses have complementary skills and reduce overheads by joining forces.  A merger and acquisition can be useful to grow faster with increased turnover in comparison to slower organic growth.
  2. Develop your business to be floated on the Stock Exchange – there is considerable work to achieve this goal and the investors require solid prospects and excellent returns. Where achievable it can provide you with considerable value well beyond a trade sale.
  3. Retain ownership and control – where you have developed a sound management team you might leave the team running the business and receive ongoing capital rewards.  This may or may not include the recruitment of a Managing Director to replace your role.
  4. Sell your share to another individual– convert your business to employee ownership or MBO (management buyout). This can be an attractive way of releasing your capital over a short period of time. The agreement can include a period where you continue or an immediate exit.
  5. Close the business – have you decided to cease the business trade and want to sell the business assets?  When you have realised the value into the company and paid all obligations you can then release capital.

How we can help

Is exit the best strategy or closure the right outcome for you and your family? Considering all of the above you should be able to achieve a positive outcome. We will help you assess your situation, explore your options, provide you with advice and develop an innovative solution for you. To arrange a free, no obligation consultation click here or call 01592 630085.