How to plan an effective exit strategy for your business?

We have seen in previous articles that   transitioning out of the business is inevitable, so any business owner should be prepared and should follow a rigorous multi-disciplinary process:

Defining objectives: the mission-critical step

If you talk to an investment banker about your thoughts for the future of your business when you want to exit he will probably tell you an IPO is definitely the way to go. Is it? It depends.
You have two grown children they are not working in your business and have not indicated a desire to take over your business. Selling your business seems the only option. Should you? It depends.
You are not in hurry to retire but you’ve been informally approached by a potential buyer and the price seems attractive, should you sell? It depends.
Before making any decision you should ask yourself: what do I want to do when I leave the business? Would my spouse agree? Would my children have any desire to take over the Business? Would they be able to do it? Would they be able to provide me with enough money from the business to live comfortably? How much is he business worth? Would it provide me with enough money to live comfortably after I sold it? If only one of my children is interested in taking over the business how can I be fair with the others? If you want to maximise  the transaction’s proceed, in line with your personal goals, the Business goals and your family goals, you have to thoroughly define your objectives and priorities.
Objectives will be both financial (liquidity, sale price, taxation/estate planning) and non-financial (succession, legacy and reputation, employee and stakeholder concerns, family dynamics, and other special interests).
Some of the many questions you will need to ask yourself include:
• Do I want an on-going management involvement in the business? If yes: how long should I stay? Would I work full time?
• Do I want to retain a financial stake in the business?
• Have I determined what is really important to me? For example, do I wish to maximise the value I receive for my business, or are other issues as important? May be even more important?
• To whom do I want to sell/transfer the business—to family members, financial investors, employees or competitors?  Do I really care?
• Do I want to keep the business in the family? Is anybody in the family able to take over? If not can I train them?
• Are there employees or others whom I want to protect or reward? Would I sell to my employees?
• Are there other motivating factors for me? Do I want the business to retain its name and identity following my exit? Is it important that my business retain its independence?
• What are my financial needs?
• Does my business have all the necessary managerial expertise required to be successful in the future?
• Does the business have an appropriate capital structure and access to further funding to enable it to take advantage of the future opportunities?
Answering these questions requires a clear view of the future strategic direction of the business. Whatever your decision, it is only through a clear understanding of your personal, your family and business priorities that you can choose the exit options that will best meet your needs.
If you envisage to transition out of your business in the near future and would want to explore what you should do please do not hesitate to call Jean-Bertrand de Lartigue on +44 1656 766 363 or e- mail him at JB@macint.co.uk?

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