What does a typical exit process look like?

With all businesses being unique, every exit is going to be different; however, there are going to be some general similarities and therefore if you have reached the point where you want to put the wheels of exit in motion and start attracting potential buyers, it helps to have an idea of what the process might look like.

It is important to bear in mind that you will need to continue running the business throughout this process and although you will have significant input along the way, it makes sense to work with professional advisers with in-depth experience in this area, who will be able to take on most of the key actions detailed below.

1. 1. With the help of your professional advisers, you need to outline your ideal sale structure, considering the sale from both a financial and legal point of view.
      
   2. You would need to produce a document that invites prospective buyers to make offers and therefore needs to present your business in a positive manner. This document is referred to as an Information Memorandum (sometimes called a Sales Memorandum).
      
   3. From your list of prospective buyers, do your research in order to help you produce a shortlist of potential buyers ensuring that you have the contact details for the relevant person/people.
      
   4. Something that is becoming increasingly popular is for sellers to have a limited and confidential auction process. This can help increase the price that your business eventually sells for and is therefore definitely worth considering.
      
   5. At this point, you will need to contact each of the potential buyers, and it is important that after confirming their initial interest, any potential buyers must sign a confidentiality letter that prevents them from using this process to gain a competitive advantage by learning more about you and your business.
      
   6. With confidentiality protected you can now send out the Sales Memorandum to the potential buyers.
      
   7. It makes sense to negotiate with and seek out initial offers from potential buyers at this stage rather than showing several potential buyers around your business, knowing that a maximum of only one is going to make an offer that you accept.
      
   8. You should now have a number of offers that should allow you to compare potential purchasers, whilst also taking into consideration other aspects that you may have learned about them whilst conducting your research and this should help you make an informed decision about who you would prefer to sell your business to.
      
   9. Your solicitor will now get involved to help draft a document known by different names such as heads of agreement or heads of terms or letter of intent or term sheet or memorandum of understanding or even shortened down to just ‘heads’. This can be subject to contract and as the various names suggest this document includes the key terms of the deal such as price and timetable.
      
   10. The prospective buyer will want to do their own due diligence on your business including commercial, tax and legal issues and you will need to deal with this for them.
       
   11. With advice and guidance from your professional advisers, there will be some legal documentation that you will need to complete.
       
   12. The final parts of the exit jigsaw puzzle include the practical pieces of the handing over of the business to the new owners having completed the detailed conditions that form part of the completion of the sale. This could include notifying staff, customers and suppliers and more importantly separating your family and personal matters from those of the business that you have now sold.

Businesses are facing a time of great uncertainty and the road ahead is unclear.  Is ‘now’ the best time to be looking at options to transform your business?  One of the best bits of advice we can provide is to seek out expert help and support to give you the experienced eye and to independently question and probe!

Straight talking … that would be the 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: