Planning your exit strategy – How we can help?

Planning your exit strategy – When is the right time to begin?

There are many reasons to plan ahead. For one, it is almost certain that doing so will help you maximise the value of your business when you do come to sell it. There are lots of things which have a bearing on a business valuation starting with turnover and profit, but also including well-ordered financial records, strong evidence of compliance across all aspects of the business, and a robust business plan. Thinking about all these aspects well ahead of time makes it more likely that everything will be in place well before you start the selling process. 

The tax impact of selling your business is another important reason to plan ahead. While there may be a chance that tax legislation could change, it is still more likely than not that planning ahead will enable you to achieve the best tax treatment when a sale goes through. Getting this right can have a big impact financially. 

Finally, the apparently simple act of having a clear long-term goal for your business which culminates in a sale, even if that’s ten years ahead of you, can make a big difference to your business performance. You wouldn’t usually set off on a journey with no idea where you are trying to get to, so why should your business journey be any different? 

With all this in mind, we would suggest that planning as soon as possible, and allowing three to five years to start lining things up before actually putting the business up for sale is a good place to start. Indeed, many start-up businesses begin life with an exit strategy already in their sights. It may be based on selling when they get to a certain size, a particular level of profitability, or it might be time related. Either way, they begin with an end already in mind. 

On the other hand, leaving it to the last minute is much more likely to make the whole things a lot more stressful, to distract you from the daily running of your business, and to result in a less than positive outcome all round. 

So, where do you start? Crafting a business exit strategy requires careful planning and strategic thinking. Luckily, we can help. 

How Hilton Smythe can help you 

For more than ten years we have advised thousands of people who own businesses just like yours. Our experienced team has the knowledge, expertise and understanding to help you build a strong plan for the future. They know exactly what needs to be covered, what the challenges and pitfalls are, and more importantly what the opportunities are too. They will bring all their experience to bear to make sure that your plan gets you and your business to where you want it to be. 

The Process

We have a tried and tested approach to Business Exit Planning which takes each of our clients through a straightforward process. 

1. Defining Objectives: The journey begins with a workshop to clearly define your exit objectives. What are your goals for the business sale? Are you aiming for maximum value, ensuring a smooth transition for employees, or maintaining a legacy? These objectives will shape your entire exit strategy.

2. Thorough Business Analysis: We conduct a comprehensive analysis of your business’s current state; we evaluate its financial health, operational processes, and market position; and we identify strengths and weaknesses. Combined these will help determine the best approach for a successful exit.

3. Industry and Transaction Data Analysis: We delve into your industry landscape and gather all the relevant data. Understanding market trends, competitor performance, and recent sales will provide valuable insights into the feasibility of your exit strategy.

4. Value-Enhancing Strategies: We explore strategies to enhance the value and saleability of your business. This could involve optimising operations, diversifying revenue streams, or strengthening intellectual property assets.

5. Financial Analysis and Valuation: We perform a thorough financial analysis and seek a professional valuation opinion. This step provides an accurate assessment of your business’s worth, guiding your pricing strategy during negotiations.

6. Preparing for Sale: We share guidance on how to prepare your business for sale. This involves ensuring accurate financial records, addressing legal matters, and organizing documentation that potential buyers may request.

7. Comprehensive Review: As part of the process, we conduct a review of key value drivers, competitors, and the market landscape. A SWOT analysis helps pinpoint strengths, weaknesses, opportunities, and threats. We also provide insights into the current M&A market, value indications, and recommendations encompassing financial and legal factors.

Exploring Exit Strategy Options

There’s no one-size-fits-all approach to exit strategies. Your choice depends on your type of business and your desired outcome. Common exit strategies include:

1. Trade Sale: Selling your business to another company within the same industry, often with a tie-in period for transition.

2. Private Equity Investment: Private equity firms invest in your business, aiding rapid growth before a profitable sale.

3. Management Buy-Out/Buy-In: Current or new management takes over ownership and operations.

4. Employee Ownership Trust: Company staff purchases the business over time, providing tax-efficient solutions.

5. Share Sale: Selling shares to other shareholders or the business itself.

6. Ongoing Ownership: Retaining ownership while handing over operations to existing management.

7. Family Business Succession: Planning for a smooth transition within a family-owned business.

Selecting the Right Exit Strategy

Choosing the right exit strategy requires evaluating your business’s success levels, takeover options, and financial circumstances. Hilton Smythe’s approach involves a detailed assessment of your business’s goals, motivations, and feasibility of exit strategies. We work with you and your management team to build a strategy that matches your goals while enhancing your business’s attractiveness to potential buyers.

Consultancy Services Beyond Exit Strategy

Apart from exit strategy services, we offer expertise in acquisition services and company sales. Our M&A experts source domestic and international targets and provide comprehensive support throughout the process. We also provide business valuation reports, offering independent opinions on your business’s value and assets, leveraging our years of experience in the M&A market.

Conclusion

Developing a successful business exit strategy requires careful planning, strategic analysis, and professional guidance. By defining clear objectives, analysing industry trends, and exploring various exit options, we will help ensure a smooth transition that maximises value and achieves your desired outcomes. Working with our experienced advisers will help you navigate the complexities of the process and make informed decisions that ultimately get you what you want when it comes to exiting your business. Contact us today for a no obligation discussion.