Planning for a successful exit from your business

Have you planned when and how you will exit your business?

We have set out below how to avoid being one of the thousands of businesses liable to lose out for lack of succession planning. Poor planning often leads to a poor result.

It's never too early to work out your strategy for exiting your business. Surveys highlight poor succession planning in the UK - and sellers who haven't prepared get less for their businesses than those who do, or can't find a buyer at all. A buyer might make an offer now, but two years is the usual time frame for a successful sale. Changes you need to make can't be achieved overnight, so get planning.

Steps to riches

Strategy

• Consider your strategy - can you add value to your business when you plan to sell? Should you be aiming to maximise shorter- or longer-term profits? Are you over-reliant on just a few customers?

Timing

• When will your business be worth most, given changes in your supply chain, competitor activity or technological advances?

Tax

• Tax-efficient strategies for realising your investment in the business can take time to set up - your company might need to make sizeable contributions to your pension fund for several years. Stay in touch with your professional advisors, to make sure tax changes are factored into your plans.

Legals

• If you have legal disputes, sort them out. If a shareholders' agreement or your company's articles of association say you must offer your shares to other shareholders before you can sell to an outsider, square things with them. Agree who will take over personal guarantees. If the company leases premises from you, discuss the alternatives. Ensure all key agreements are in place.

Employees, customers, and suppliers

• Key workers must be retained for a good sale price. Clauses in customer or supplier contracts may give them termination rights if ownership changes - when will you talk to them, to make sure they'll do business under the new owner?

The offer

• Take advice on the different tax implications of selling company shares, compared to the sale of company assets - legally, selling shares is generally a better option for the seller than selling assets.

Systems

• Make sure management information systems, equipment and premises are in good order.

Finances

• If you want to keep a stake in the business, you can restructure the company's finances. Increasing bank borrowings and selling some of your shares back to the company is an option.

It is important to get your exit plan in order. To discuss how we can help you please contact Tim Roberts or telephone 01908 692769.