ONSIDE /ADVICE
3. Timing
In order to attract the right buyer or investor and maximise
value, it is important to start preparing for an exit well in
advance. This is ideally 12 to 18 months before entering
into an exit process. This allows the business to be
positioned to attract buyers or investors, to start to prepare
the information that the buyers or investors are likely to
require and to deal with any issues that may impact on the
success of the exit process.
Chris Summerscales
4. Financial reporting
[email protected]
During the sale process - which can last upwards of six
months, if not much longer - you will need to ensure that
key indicators of the business remain attractive to buyers.
So firstly, focus on keeping sales, profits and margins in
line with expectations and forecasted growth. There is no
substitute for having robust financial information.
An experienced researcher and analyst Chris
Summerscales is a lead member of the Seneca
Corporate Finance advisory team.
01942 271 746
5. Customers and suppliers
8. Tax
Preparing a business for an exit process well in advance
allows business owners to make sure contracts and
agreements with key customers and suppliers are tied up
and will remain in place following a change of ownership.
Having key customers and/or suppliers tied in will help
to drive value in the process and maintain value with the
ultimate buyer through due diligence.
The current tax regime is favourable for business owners
considering exiting their business, with entrepreneurs relief
enabling shareholders to extract capital at a 10% rate (up to
£10m), rather than at the typical capital gains rate. This has
the potential to change in the future, so being aware of the
current tax rules will help business owners extract capital as
efficiently as possible.
6. Management team
9. Advisors
In the same way as with customers and suppliers, preparing
for exit well in advance will allow key members of the
management team to have the appropriate service agreements
that ensure they will stay with the business. This is especially
important with any business that could be termed a ‘people
business’, where the expertise or relationships of certain
members of staff are key to the ongoing performance of the
business.
Exiting a business is a big decision and it is important to
find experienced advisors that you can trust and work
alongside. Corporate Finance advisors will help maximise
and maintain value, whilst good legal advice will ensure
the best structure and give the best advice on any potential
warranties and indemnities a buyer might look to put in
place. More than anything though, good advisors will allow
you to…
7. Growth strategy
10. Keep running the business
Polishing and communicating your ‘vision’ for the business
is perhaps the most difficult part of the preparation process.
It is essential that you are convinced by your own strategy;
if you are not, neither will your buyer be. It is important to
understand if the business can support growth, or if there
might be an investment requirement in people or systems to
support further growth.
The biggest and best piece of advice a business owner can
get is to remain focused on the day to day operation of the
business and not let an exit process become too much of a
distraction. A decline in trading performance will lead to a
price reduction at best and be a deal breaker at worst.
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