Exit and
Succession
Most people don’t have an exit plan, but there is nothing more certain than every business owner will exit sooner or later. Let it be on your terms!
Talk to us about your business and personal goals and let’s get a plan of action in place.
EXIT PLANNING
Every business goes through four phases of a business life cycle: start-up, growth, maturity, and decline. Once in decline, it is very difficult to resurrect a business and this is generally where the fifth option of exiting a business occurs. Commonly referred to as liquidation or a distressed sale. Unfortunately, most business owners tend to defer their exit plans at the maturity or decline stage of the business life cycle. In doing so, this not only impacts the sale value of the business but also missed opportunity value during tenure.
That’s why we recommend designing an exit plan or strategy as early as possible in your business life cycle. This provides the framework to build a solid operational foundation, direction, and clarity for business decisions and enhances the business’s current and future value.
Whether you need an exit strategy, or you simply want to understand the market value of your business, we can help. Here are the four main exit options.
Outright Sale
When the time is right, sell on your terms and at the maximum value for your business and industry. A managed operation with documented processes, a strong track record of growth, and a clearly defined point of difference will always command a premium multiple in the market. Conversely, a forced or unplanned sale invariably leads to a discounted or disappointing result.
Succession Plan
A succession strategy is a plan to succeed the management or ownership of the business, as a process for continuity and gradual change.
A significant percentage of SMEs are family-owned, passing on a legacy and providing a helping hand to someone you know, and ‘trust’ makes sense. Many owners choose to bring these people into the business well before they leave, so they can groom and train them in order to learn the ropes and ensure a smooth succession. It is important that this process follows a well-defined plan so that all parties are on the same page in terms of objectives, timelines, and financial agreements.
Management Buyout
Somewhat of a hybrid, the management buyout is a sale to existing employees, management, partners, or investors which takes out the emotional aspect of selling to family and friends. The outgoing owner can be more objective, and the transaction can lead to a clean break with maximum financial gain. The incoming individual or team generally already knows the challenges and opportunities of the business and is perfectly skilled to take over.
It is now common practice for prospective buyers to specifically come on board as employees with a pathway to ownership through a share buyout process over time.
Merger
If you're looking to grow your business quickly, scale your business, tap into new markets, and secure a gradual exit, it is worth considering a merger.
Mergers and acquisitions provide a platform to launch your business into a new phase to maximise potential and grow value.
However, successfully navigating the merger (or acquisition) process can be complex and time-consuming. That's where Grit Consulting comes in. We'll work with you to understand your goals and develop a strategy that strengthens your chances of success. With our experience and expertise, we'll help you every step of the way, from identifying potential targets to negotiating and closing the deal and integrating culture, systems, and people.
BUSINESS APPRAISAL
Before you make any exit plans, it is important to understand the value of your business. Our in-depth analysis and discovery process will help you with an accurate and realistic market value to help with your decision-making.
We can identify gaps that impact operational and business value and demonstrate how to remedy this to enhance your net earnings and future value based on a premium sales multiple.
It is important to understand and acknowledge your personal and professional circumstances to help realise the life you want and your long-term goals.
Here’s what we’ve learned:
i. Most people don’t have an exit plan, but every business owner will exit sooner or later - let it be on your terms
ii. Many businesses sell for less than the owner would like – often because the sale is rushed or ill-prepared
iii. Grooming pays – like selling a house or a car, you prepare it for sale and make it look the best it can.
iv. Start early – the day you start your business is a good time to start planning your exit
Leaving your business is hard – but you don’t have to do it alone. We would love the opportunity to work with you and we’re confident that together we can maximise the potential in your business. If you would like to know more, click on the link below to contact us with any questions.
Want to know the value of your business?
Click on the link below to book an initial, no-cost, and no-obligation market appraisal.