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Exit Planning for your Business – a New Year’s resolution?

Posted: 14th Dec 2015 by Mark Grewer Business Advice General, Corporate Finance
Exit planning - new year

Does a New Year make you consider exit planning your business?

It’s a fact of life (and death) that eventually all of us will have to exit our business one day.  Either in an organised way…or not. So, whilst day to day we may be continually running on that hamster wheel with our heads down, at some point, we need to look up & really assess why we are doing this and consider what exit planning we need to make.

What are we building for? And are we directing our efforts at the most important and potentially valuable aim – our exit?  Establishing a structured exit plan, well before you ever need one, should be on the New Year’s Resolutions list for all business owners.

How to make your business more valuable and attractive to Potential Purchasers

So what are the actions that you should take to make your business more valuable and more attractive to the greatest number of potential purchasers?  There are obviously many different factors. Some sector specific, and some quite typical across all industries.

Through our membership of The Corporate Finance Network, we have access to a tried and tested programme that aims to increase the value of your business, and (more importantly) to make it more saleable. Research of business owners is conducted regularly, and here’s one fact from some recent findings of 14,000 businesses, who had received an offer to buy their company in the last 12 months. This may surprise you!

Would you rather receive 2.93 or 4.49 multiple of your profits when you sell?

The average sales offer received among all of the businesses surveyed was 3.7 times pre-tax profit. However, these businesses were then further analysed between those businesses where the owners were responsible for all the sales effort in their companies, and those that were remote from the sales process.

  • Where the owner does not know his/her customers personally and rarely gets involved in serving an individual customer, the offer multiple went up to 4.49.
  • Companies where the founder knows each of his/her customers by first name received much lower offers of just 2.93 times pre-tax profit.

Clearly this demonstrates that in order to be more attractive to potential purchasers, the business needs to operate day-to-day independent of the owner as much as possible. An easy thing to say you may think.  But if you’re not in that position at the moment, we can help with ideas and strategies that may allow you to move towards that position over the coming months and years.

Contact us to find out more

And that’s just one of a number of areas we’ll look at if we conduct our unique 1-2-1 Exit Planning Workshop with you in the New Year.  Please contact mark.grewer@hghyork.co.uk for more information or call 01904 655202.

Take Part in our Exit Planning Research

To help us to deliver the very best advice on exit planning, we would love all our clients to take part in the next piece of research which involves just 5 quick questions. Follow the link  https://www.surveymonkey.co.uk/r/CFNExit2015.

Thank you! coporate-finance-network (1)