Your Business March 2020 - 292

The
interview

FINISHING
TOUCHES
What's your ultimate plan for your new company?
Make sure you have an exit strategy before it's too late

A

mid the excitement
of starting a new
business, formulating
an exit strategy
probably isn't top
of your to-do list.
But it's vital to have a long-term
plan that includes your proposal
for how you intend to leave the
company. Will you sell it? Take
it public? Pass it on? Whatever
scenario you're contemplating, it
will shape the way you approach
the business, so it's essential to
lock it down in the early days. 
"The exit process can be complex
and emotional, but it needs to be
detailed," says James Caan.
"This is not something
you should do quickly. To
get the best results, you
need to have prepared
your business for exit."
"Laying the groundwork
for the successful sale of a business
represents one of the most significant
challenges in the life cycle of any
company and its owners," says
Fentress Seagroves, US inbound
advisory leader at professional
services giant PwC. "Early planning
allows time to sufficiently understand
the strengths of your business and to
identify and shore up weaknesses."

Here's our guide to the
options you have when putting
your exit strategy in place.
Ask the right questions
Who will take the firm on, if anyone?
Will you sell it? What are you looking
for if you do? Do you want to take as
much money as possible out of the
business while you're there, or make
it as profitable as you can for a sale
at the end? Will you control it tightly
or create the management structures
that will allow the company to thrive
when you're no longer running it? 
Answering these will allow you to
run the business in a way that will

The exit process
can be emotional
make sense both during your stint in
charge and also on the day you leave. 
Weigh all your options
Here are the possibilities open
to you when you decide not to
take your business any further.
n Liquidation Perhaps the
easiest option is to close the doors

and walk away. Companies often
hit the headlines when they are
wound up or liquidated owing to
debts, but you can choose voluntary
liquidation as long as you're solvent. 
If you want to retire or step
down, and you don't believe it's
worth trying to sell the company,
you can go through a six-step
process to appoint a liquidator.
n Passing it on Many businesses
are passed down family lines, with
a son or daughter taking over a firm
from their parents. As well as the
satisfaction of keeping something
you've worked hard to build in your
family, this option can allow
you to continue to play a role.
n Sale You can sell the company
to a competitor, an investor, a
management team or, ultimately,
anyone who stumps up the cash
and meets the legal requirements.
This option releases the owner from
any responsibilities and, ideally,
leaves them with a cash sum. But it
requires a lot of skill and hard work.
"Think of this as being like selling
a house," says James. "Would you
bring in potential buyers for viewings
before the walls were painted
and the large cracks covered?"

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12/02/2020 17:15
Your Business March 2020

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