For most business owners, selling up is usually a once-in-a-lifetime event. And while it’s one of the biggest challenges that many owner managers will face, it’s often pushed to the back of their agendas, with the day-to-day management of operations taking priority.
It’s estimated that nearly 45% of business owners don’t have a plan in place for their exit. But the value of planning ahead and creating a clear long-term strategy can’t be underestimated. Ultimately, it enables you to maximise the value of your business and helps to place you in a stronger position post-exit.
There’s a whole ream of factors to take into consideration when formulating an exit plan, some of which include:
1. Knowing which route is right for you
Knowing which exit route you will take is key, as it shapes the course of your exit strategy. While there are many exit routes to take, the two most common include:
Management Buy Out (MBO) – Wherein your senior management team acquires the business from you the owner. This means that you will need a management team in place with the capability of running your business once you have left.
For many business owners, the MBO route allows a level of reassurance in knowing their business will be left in the capable hands of a team they know and trust. That being said, it does require significant financial input from the management team, which can sometimes be a blockade.
Sale – Essentially this route involves the business being sold to a third-party buyer. As the owner, you would exit the business after an agreed period of time, after which the new owners would take the reigns.
2. When are you looking to leave the business?
In an ideal world, you would start planning for your exit at least 3 years before you actually leave. This gives you time to gain confidence and control over your exit, enough time to get your affairs in order, and will ultimately help to maximise the value of the sale.
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