By Janette Whitney, published on 9th August 2011

Selling your business could be the most important financial deal you’ll ever make, and perhaps the most emotional. Not all businesses are saleable – you can only sell your business if someone is prepared to pay for it. If you can’t identify strong reasons, that can be easily substantiated, why you business would make a good acquisition, it’s likely to be difficult to find a buyer.

Many business owners put in a lifetime of hard work building their business only to throw away some of the rewards by failing to consider properly how they will exit from the business financially.

Why you need an exit strategy

When you start up your business you prepare your business plan to give you a clear vision of what you want to achieve from it. But to maximise the value you get from the business it’s essential to think about how you will leave it further down the line.

Carefully planning your exit from the business can help you to:

• Mould your business into the ideal shape for your chosen exit option – maximising the value you get from it.
• Groom successors if they are coming from within the business – whether they are a family member or part of your management team.
• Exit at a time of your choosing, when the business is doing well and the market conditions are advantageous.

In an ideal world, you should include an exit strategy in your start-up business plan – as the army saying goes- ‘Before you go in, know how you are going to get out’, but at the very least you should start planning a few years ahead, usually 3-5 years ahead.

Get the timing right:

The best time to exit is when you are in a position of strength

• When your profits are increasing, not static
• When there is confidence in the economy and your business sector
• When the impact of seasonal trading patterns of your business are at their best.
• To take advantage of any beneficial tax changes, eg retirement relief

Possible exit routes:

Most exits from small businesses are sales through management buy-outs or family succession at a modest sale price, but there are several other options.

1. Sale of business (trade sale)
2. Management buy-out (MBO)
3. Family Succession
4. Management buy-in (MBI)
5. Stock market flotation
6. Merger
7. Liquidation

Need to discuss the future of your business? Then please contact me at Janette Whitney & Associates on 01403 733671 or visit www.whitneyassocs.co.uk