Owner-managers should plan their exit carefully to maximise returns when selling their business, writes Mike Brown of Anderson Anderson & Brown Chartered Accountants
Private business owners should review their ownership position regularly to decide whether their commercial objectives are best met by continued ownership of the business or sale of part or all of the business.
There are a number of reasons why a business may be sold, including retirement or illness, no clear family succession, or reinvestment of capital for other projects.
Whatever the motivation, the decision to sell is one of the most important financial decisions that entrepreneurs will ever make. It is perhaps surprising then that many private business owners don’t plan their exit and are not aware of the various ways in which they can dispose of their business.
The primary exit routes are a MBO/MBI, family succession and public flotation. By far the most popular exit route is a trade sale, although high quality management teams backed by aggressive funders can provide stiff competition to the trade players.
When planning their exit strategy, private business owners must ask themselves: “What is the best way to maximise my financial return and satisfy my personal aspirations?”
Most importantly, the choice of exit strategy adopted and the timeframe in which to execute it can make the difference between disposing of the business at a fair price and not being able to dispose of it all.
Our experience has shown that vendors who approach the sales process in a controlled and structured way are far more likely to achieve a more satisfactory result on completion of the sale. The earlier this exercise is undertaken the more exit options there will be available, and the more likely it is that the optimal outcome will be achieved in terms of sale price and personal aspirations.