7 Key Areas in Exit Planning

A well-tailored exit plan is fundamental in helping to maximise the value of your business ahead of sale. The guidance provided below is generic and therefore it is important to remember that a well-constructed exit strategy needs to be unique to your individual circumstances.

Expert advice from appropriate professionals is highly recommended to help you make the most of your business assets.

Maximising the value of your business through the assessment of key variables is essential in helping to improve its future value. The following value characteristics represent some of the aspects of a business that most prudent purchasers will study.

Profits – A businesses with a strong growth track record, which has the potential for further growth and cash generation will be of a greater value and interest to future buyers

Expense Control – Knowing your numbers and demonstrating a successful track record of expense control is vital in demonstrating value and security to a potential buyer.

Management Team – Failing to recruit talented individuals in all key management positions within the business is a common mistake made by many business owners. It is vital that your business can stand alone without your involvement. You need to implement a strong management team in order to delegate the running of the business and maximise the value ahead of sale.

Products and Services – What are your unique selling points in comparison to your competitors? Are you a market leader in your industry and would you attract the attention of potential new buyers? Considering these points and having scalable products and services that can react quickly to change will always prove more attractive upon the sale of the business.

Client Base – How strong is your relationship with your clients and how do you measure loyalty or retention rates? Is the business reliant on a few key clients or does it have greater independence and long-term contracts in place to protect fluctuations in business revenue? These are all key considerations when assessing a business’s transferable value.

Balance Sheet – How strong is your balance sheet? What assets add to the future value of the business i.e. fixed assets, commercial property. What is the current level of debt within the business and how easy has it been to secure new finance or re-finance existing debt?

Key Contracts – Having suitable contracts in place with key employees, suppliers and any individual or entity that could have a significant impact on your businesses is essential. The business should have been audited, along with considerations given to other factors like how business property is held (i.e. as a separate vehicle so the purchasers have the option of purchase or lease) and is the brand and any associated intellectual property protected. Prior to the sale of any business, appropriate due diligence will consider the above issues, and these will inevitably affect the price and speed of sale.

To summarise, your exit strategy should be well formulated through the close examination of your business’ strengths, qualities, and weaknesses to help improve operations to increase the potential value on the future sale of your business.

The above list is only a selection of characteristics that will affect a business sale and is by no means exhaustive. The guidance provided is generic but offers a starting point that can help you tailor your exit plans for your own unique personal and business circumstances.

At Sovereign Wealth in Market Harborough, we specialise in helping business owners and directors achieve financial independence by creating and building a wealth plan tailored to their specific personal and business needs.

Our advisers will make sure they understand you and your business in great detail, working with you to help you obtain the maximum benefit from all your hard work.

Remember, as an entrepreneur, it’s never to early to begin planning your exit strategy – start today by getting in touch with us.

Exit strategies may include the referral to a service that is separate and distinct to those offered by St. James’s Place and Sovereign Wealth.

Get in touch.

We work with many local business owners and directors across the Midlands, helping them and their families to become financially independent.

Whether you are a startup looking to scale or a seasoned business owner planning your next journey, we will take the time to understand your objectives and plan a course of action.

You can call us on 01858 791 182  or email us at the link below.

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Sovereign Wealth Limited is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. Sovereign Wealth Limited is a Limited company registered in England and Wales, Number 07115386. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.