We recently surveyed more than 500 medium sized UK businesses about their experiences when seeking external funding: how often, how much, what for and where from.
8 key steps to building a successful business exit strategy
Succession can be incredibly positive – indeed transformative – for a business.
Take a look at our 8 step business exit strategy checklist, which summarises some of the key things to look out for on the road to business transition.
These key aspects break down into three main areas:
While it’s a truism to say you need the right team around you – and many fading sports coaches have padded out their retirement funds doing motivational speeches to business folk on just that – it often doesn’t receive the attention it deserves. There are two aspects to this: the team of professionals advising on the transition, and the management team taking over the business.
Finding the right legal, tax and financial advisers to help you sell your business is crucial to selling the business. Going it alone will likely be worse still, so it is worth researching who is most experienced in working with your sort of business on the kind of transition you expect.
They, in turn, need to be supported by those within your business who are presenting it for sale. For example, internally, you need a good finance director or controller: someone able to turn out decent quality accounts.
Post-sale, ensure the incoming management team, has the right package of skills or has a good cultural fit with the business.
This is, of course, a complex business, and funding options are covered in the funding section. However, two aspects are worth mentioning here:
This dovetails with the above point on getting the right team of experts. That team should get you a realistic valuation, and therefore the best chance of attracting a potential buy. Ask too much, and you won’t attract a buyer. Ask too little, and not only will you not maximise value, but the ticket itself could attract the wrong sort of prospective purchasers, who are looking for a smaller business.
Finance needs to cover the actual cost of the deal, not your opening offer, plus the transactional costs, which can put an extra 10% on the price.
Funding for Succession: Navigating the transition in business ownership
We have already spoken about the importance of the succession plan from the outset, and each step needs to be consciously guided. Three aspects are worth emphasising here:
Have the right documentation, this is especially true when it comes to the Sale & Purchase Agreement, which has been known to cause significant hold ups. It’s not necessarily accessing finance that soaks up the time, but arriving at an acceptable Sale & Purchase Agreement.
You need to factor in the various stages of a sale, along with its complexities, and not fix an optimistic end date, as this can lead to staff demotivation and customer concern, which will erode the business’s worth.
Focusing on deal to exclusion of all else can cause the business to deteriorate and the potential buyer to pull out.
Want to learn more about exit strategy planning?
Download our free whitepaper, Funding For Succession