Exiting your business is a big commitment. You’re leaving behind everything you’ve built up, so it’s vital that you have a plan of action and a clear route to your end goal. This means sitting down with your advisers to create a long-term exit strategy, with a plan that’s aligned to your key goals, aims and financial commitments as the owner.

Coming up with this plan won’t happen overnight. A business sale is a complex process with many different elements that all have to be considered. A workable plan, will give you a helpful route map to guide you along the way.

Here are some of the fundamental things to think about when writing your plan.

Know your sale price

As the vendor, you need to come up with an asking price for the business. Your sale price isn’t just driven by market forces. It’s also dependent on how much money you need to raise.

If your aim is to start a new business, think about how much capital will be needed to get this idea off the ground. If your goal is to retire, you need to work out the size of the lump sum that will be needed. You could live for 20 or 30 years post-retirement, so any cash raised has to provide you with your desired income and lifestyle for a number of years. Don’t forget to allow for any tax that may be payable on profits you’ve made. We can help you estimate that.

Work out what funds you will need to retire or invest and make this total cost the benchmark for your ideal sale price. If you’d need 10Mill over 20 years, you know that your asking price must leave you with more than that after tax to provide a cushion for your finances..

Get the business valued

The next step is to understand the value of the business on the open market. This means talking to an M&A (mergers and acquisitions) expert, or working with the Corporate Finance team of your current accountancy provider.

Value is a complex measurement. It can be influenced by your brand’s reputation, the business’ current financial health, the worth of your company assets or the skill of your existing team. A change in any of these elements can have a huge impact on your sale value – and, as a result, the size of the profit that you and your departing shareholders will make from the sale.

If your current value is projected as 8Mill, but your initial asking price must be 10Mill or more, there’s some work to do to add this value and boost your final sale price.

Decide on a successor

Every business needs a safe pair of hands at the top. Thinking about who will take over the reins, and how to make this transition run smoothly, is a vital part of your exit strategy.

A succession plan explains your own plans for retirement, who will take over your role and the timescales for this succession process. It may be that a family member is your intended successor. It could be that your intended buyer will take on the owner-manager role. Or it could be that a current member of your executive team is ready and willing to step into your shoes. Make sure you’re clear about who the new boss will be, and how (and when) this person will succeed you as the leader of the business.

Work out the timescales for selling up

Selling your business is rarely something that happens quickly. Preparing for a sale can often begin years before the proposed date of exit, so it’s important to be clear about your exit strategy and the key dates along the main timeline.

A five-year exit strategy is common, and you should allow at least two years to complete the process from beginning to end. Selling up may seem like the final scene in your business play, but in fact it’s only the beginning of a long and protracted final act. The more you can do to plan each step of the exit, the more successful your final sale will be.

If you think now is the time to start planning your exit, please do get in touch with us. We can help you value your business, work out your benchmark sale price and achieve the best possible sales price.