An exit strategy is essential for all business owners to maximise value and achieve the best possible return whilst ensuring a smooth transition to new ownership. However, an exit strategy isn’t something to be left to the last minute; instead, it should be developed well in advance to keep the business focussed towards the end goal and open more opportunities for value creation.
Read our case study of the dream business exit to give you some ideas of how it can be achieved.
A well formulated business exit strategy is required to achieve the best results. It must be bespoke to your business and personal goals; a template from another company simply won’t work. You need a formal exit plan document to set out your strategy and to act as a roadmap to achieve your objectives. But it can be difficult to know where to start. What are the most important factors to consider?
Align Your Strategy To Your Chosen Exit Route
There are different ways of exiting a business depending on your plans for its future and your personal ambitions. You may for example wish to keep the business within your family, sell it to an external investor or your management team, or merge it with another enterprise. The business exit strategy document should reflect this; however, if you have not yet chosen the route, your plan should reflect all possible scenarios which you will firm up later.
Focus On Preparing Your Business For Its Transition
Whatever your intended exit route, it’s essential that your business is in optimum condition. Not only should it be consistently profitable, but it should also offer the capacity for future growth. This will attract both experienced buyers and investors, who present the best chance to develop the business further.
When considering how to write a business exit strategy focus on preparing your organisation for consistent and sustainable growth, even if this is years before your intended exit date. Your strategy should plan to:
Achieve consistent year on year growth.
Ensure debts and liabilities remain manageable and proportionate.
Ensure a supply of well-managed working capital.
Increase net assets.
Negotiate and secure ongoing contracts.
Develop your management team with strong and loyal team members who can be trusted to run the company day to day.
Deliver optimum operating efficiency.
Ensure maximum Return on Investment (ROI) on plant, equipment, human resources, and marketing & business development.
Protect intellectual property
Remember, it’s vitally important that your business can grow without you after your exit, not continue to depend upon you! Your plan should also include a financial forecast model to demonstrate the outcome of the exit strategy in monetary terms, month by month over the years leading up to the exit point.
When writing your exit plan, working through these steps will ensure you prepare thoroughly, without missing key areas:
Decide what you hope to achieve from your exit and prioritise your aims. Talking this through with someone is extremely beneficial but it is worth considering carefully who you share your ideas with.
Identify the areas of your business that require development to ensure it reaches its full potential sales value.
Devise an action plan to address these, using Key Performance Indicators (KPIs) to provide a sharp focus on improving weaknesses and optimising strengths.
Engage the services of an external business expert who can help you to select the exit route most suited to your needs, develop your exit plan with you, and monitor your business’s progress.
Regularly review the plan and don’t be afraid to change it if there is good reason to do so.
If you would like help writing an exit strategy , contact Secantor today. As experts in exit strategy consulting and building value in SMEs our experienced team will ensure you plan the most suitable exit strategy to achieve the best outcome. We will listen to your plans, act as a sounding board for your ideas, and help you to write the perfect plan for your business.
For more information, please speak to an expert and book a call with us today.
Since all businesses are different and may have varying financial requirements, it makes sense for one of our experts to get to know your company in greater detail so we can create the perfect package for you. To do this, we provide a free business review or site visit, enabling us to obtain all the relevant information we need to improve and manage the financial side of your operations. Contact us today to start the conversation.
Over the years we have helped hundreds of businesses take control of their finances. By working closely with owners and directors we become an integral part of the management team and as a result have long-standing relationships with our customers, many of whom have relied on our expert knowledge, advice and guidance for many years. Why not review some of our case studies or watch the one-minute video below to hear what our customers have to say?