Planning your Exit Strategy
However enthusiastic you are about your business, no-one wants to run theirs forever! At the very least, business owners will want to enjoy some years of retirement after all their hard work, and some people may want to cut ties with their business well before that stage. Some may prefer to go back into employment, or decide that they want to explore a new venture and start their entrepreneurial journey all over again. Whatever your reason for leaving your business, you will need a suitable exit strategy, which will be closely linked to your motivation for leaving.
If it is a simple case of needing the money generated from the sale of your business, then you are probably looking for an acquisition strategy. This is where another company (usually a larger one) purchases your company. This can be a really attractive proposition as you can walk away with a large lump sum ready to fund the next stage of your life, whatever that might be. However, for some business owners the thought that another company will have complete control over their former business, and the impact that might have on existing staff members and clients, can be an uncomfortable one.
If the way the business is run, and protecting your staff and clients, is of significant concern to you, then a management buy-out could be a good option. This is where you sell your business to new directors from within your existing management team. As the former owner you will still receive your payout (although sometimes this might be over a longer period of repayment than with an acquisition, due to the sale being made to individuals who may not have the full funds available instantly like an established company would), but you will also have the knowledge that your business is in the safe hands of people whom you have trained and worked alongside, and who share your values.
Another option if you are strongly emotionally invested in your business would be to explore the possibility of staying on in a managerial position. This can be achieved short-term through the acquisition or management buy-out strategies, but ultimately these new owners will want to make their mark and may not want you hanging around cramping their style forever! The Enterprise Management Incentive is a very attractive government incentive to encourage SME business owners to adopt this approach.
If the business you have built up is of significant size and value, then going public with an IPO (initial public offering) might be in your interests. In the short-term your leadership becomes a valuable part of the package for potential investors. However, there are many additional requirements for operating as a public company, and you will need to show considerable potential for growth to even consider going public. This is definitely not the best option if your motivation for selling your company is to have a quieter life!
If running a business has simply become too much, but you still need a regular income, you don’t necessarily have to ‘exit’ at all. There is always the possibility of hiring a manager to run the business day-to-day while you pursue other interests. Conversely it is of course possible to simply close your business one day and never look back, but that would be a poor reward for all your hard work.
Whichever exit strategy you choose, don’t underestimate the amount of time it may take to plan and execute it. The longer you plan for your exit, the more time you have to add value to your company, and therefore increase your payout when the time comes.
Why not book an appointment with us to discuss your exit strategy?