What’s your exit strategy ?

You wake up one morning and decide that you want to retire. This happens all too frequently and can often depict a chaotic owner. Sure people’s circumstances change, although shrewd owners adjust their plans accordingly.

I‘ve been introduced to three such ‘chaotic’ owners recently and after a few core questions it became clear that their expectations are unattainable. Advisers thrive on challenges however a successful outcome rarely occurs without detailed planning.

One owner was responsible for buying everything in the business, down to the stamps. Leaving aside any ‘Owner Burnout’ issue, yes it saves costs however, this entrepreneur couldn't visualise changes that would make the business more marketable. If you are working 70-80 hours a week, something is out of balance.

Owner-managers know their business in detail, however are not always prepared for the scrutiny that accompanies a business sale and it can create tension between the parties when a prospective buyer provides their opinion on the operation.

A business exit strategy is a road map of how entrepreneurs intend to retire and the steps they need to implement to improve the likelihood of a successful outcome. It should highlight problem areas and planning provides time to resolve the issues.

At some stage your business will be subject to due diligence : commercial, legal and financial which provides the potential buyer with an overview of your operation. There will be good and bad aspects, however the purchaser will quite rightly focus on the problem areas.

There are of course, numerous exit options and each comes with its challenges. One common theme though is how to retain/incentivise key members of your team ? Do you need to improve the salaries, benefits or introduce a share option scheme ? If you are considering an MBO, do key personnel have the finance resources to be able to participate ? And if not, how can this be bridged ?

I am delighted to be working alongside two boards who have set themselves reasonable exit dates which enables strategies to be devised. They have recognised the importance of planning and provides the opportunity to prioritise obstacles.

If you would like to know more about how WCF could assist you to construct then please do not hesitate to contact us.

E : clive@whitehallcf.co.uk

M : 07977 409389