Planning your Exit Strategy

7 areas to consider focusing on when planning your Exit Strategy

Every business is unique and as such, this guide is going to be generic; however, by surrounding yourself with the appropriate professionals, they can help your generic plan become more specific.

You need to consider the aspects of a business that most prudent buyers will be interested in and consider how well your business is performing against them. The key to your exit strategy is maximising value, so identify the areas where you need to focus your energies and by so doing, improve the potential future value of your company.

1. Profits

Buyers are looking for a business with a history of strong-growing profits. If this is coupled with strong cash generation, you will have a business of great interest to potential buyers.

2. Expense Control

Potential buyers are looking for business owners who know their numbers; they can demonstrate this with a track record of identifying and reducing business expenses.

3. Your Management Team

Can your business function on its own without your involvement? If the answer is no, you need to either recruit talented individuals for your management team or train individuals up from within the business. Having a strong management team in place that does not include you, will add value for potential buyers.

4. Your Products and Services

To add value for potential buyers your products and services need to do one or more of the following: –

  • Be easily scalable
  • React quickly to changes in demand in your marketplace
  • Be market-leading in your field
  • Have unique selling points that differentiate them from the competition

5. Your Client Base

There is a fine line between protecting your key customers using longer-term contracts, whilst also reducing your dependence on a small number of key relationships. You are looking for a strong client base to increase the value to a potential buyer.

6. Your Balance Sheet

Potential buyers are looking for a strong balance sheet, specifically assets that hold their value or better still increase in value. Are your levels of debt acceptable? Is it easy to re-finance existing debt or secure new debt?

7. Key Contracts

How often do you conduct an audit on your business? Areas that you need to consider as part of your audit could include: –

  • Do you have appropriate commercial contracts with anyone who could impact your business (e.g. suppliers, employees, individuals)?
  • If the business owns property, is it held in a separate vehicle, giving a potential buyer the option to lease the property or to buy the property?
  • Do you have a brand or intellectual property; if so, is it protected?

Planning to exit your business is a new process for many business owners – seek professional help and guidance from experts and professionals who can share their experience and knowledge with you along the journey.

Exit planning thoughts from Yorkshire Powerhouse

Have you any questions?

Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:

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With all businesses being unique, every exit is going to be different; however, there are going to be some general similarities

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