Preparing for an exit? Seven key considerations to maximise success

Knowing what you want to achieve

For every shareholder, short, medium and long term objectives will come in a variety of forms. For some, it might be the right time to enjoy retirement, and for others, an exit might open the door to an entirely new venture. Identifying what you want and what's important to each and every shareholder is critical in planning for that route, especially if shareholders want to achieve different goals. 

Understanding your options

Depending on individual circumstances and aspirations, exiting a business presents a number of options. Some shareholders might wish to fully exit the business and take all of their consideration upfront. Others might prefer to sell a partial stake in their business, retaining a portion of equity and partnering with a trade buyer or investor that can help them grow. Different types of buyers will look for different qualities and it's helpful to know what these are early so that you can maximise the business's attractiveness, and ultimately terms for the shareholders.

Looking at your business from the outside

Relevant to all companies, but especially important for those operating in the consumer industry, is the public perception of the business. Prospective buyers are more likely to attach a pricing premium to a distinctive, strong brand with high customer loyalty. Ensuring every aspect of the business - from your website to your staff base - reflects your brand will help support stronger valuations.

Housekeeping – getting everything in order

A transaction can be a stressful time and it's critical to plan ahead to identify the information a buyer will want to see. Any trade acquirer or investor will want to undertake due diligence to ensure they understand the risks and rewards of what they are buying. A well organised and professional business will give buyers confidence that they are acquiring a high quality asset, and that ultimately supports the price they are prepared to pay. Thinking ahead to make sure that you are tracking the right KPIs, that your key contracts are signed, your management team suitably incentivised and your IP and trademarks are properly protected will all give buyers the comfort they need.

Tax

The sale of a business creates tax implications for both the shareholders and the business itself. Entrepreneurs' relief is one aspect of efficient tax planning but there are other considerations in the run up to a transaction which can impact the proceeds shareholders receive - how key people are incentivised, maximising R&D reliefs, and structuring property holdings are just a few. Early tax advice can help shareholders identify weaknesses in their tax planning and put in place efficient structures to optimise net gains.

Incentivising your team

Management teams and workforces will, in most cases, be critical to the success of an exit in whichever form it takes. It is therefore important to make sure they are sufficiently incentivised to deliver on the goals of the business. It will be important to help the teams understand the collective vision and that this is reflected in the remuneration plans and packages of those that are needed to take the business up to and beyond an exit. Consideration should be given to whether equity, cash or some other benefit best delivers on those objectives.

Getting the right advice at the right time

Selling a business is an important decision for any shareholder. There is a lot to think about and it can be daunting to know where to start, and when. Our specialist teams support owners and management teams through transactions to both trade buyers and financial investors. If you are considering a transaction and would like to discuss your options please get in touch or visit our Exit Ready guidance here.