Many business owners are so heavily tied up in the day-to-day running of their business that when it comes to decisions around to preparing to sell a business, they fail to maximise the value achievable by not planning for succession.
Richard Robinson, Corporate partner, warns that lack of planning is likely to result in a failure to realise the maximum value of any sale. At worst it can lead to transactions failing. In preparing any business for sale there are a number of key considerations that should be dealt with at least two years prior to any sales process beginning:
Defining Your Objective
Only through a very clear understanding of personal and business priorities can any exit strategy be properly planned. It is fundamental to ask yourselves at a very early stage what direction and what objectives you wish to achieve.
Family and Personal Considerations
Succession planning is often a lot more difficult to resolve than any of the commercial, legal or financial issues involved in selling a business. Addressing family succession issues and expectations is fundamentally important to organising a business for sale.
Ensure your management team is effective and capable of operating the business in your absence. If new people need to be brought in or ineffective managers moved on, the time to do this is well in advance of any exit.
Structuring a Deal
It’s important to understand tax, legal and financial structuring options at an early stage so that you can prepare a deal structure which enhances value in good time before any formal sale process begins.
The key to any successful exit strategy involves early planning and positioning your business in a way that enhances value, whilst allowing any owners to determine whether any future offers are credible. Involving professional advisers from the outset is essential. Working with your advisers helps maximise value and takes away some of the pain that can be involved in preparing a business for sale.
Napthens can help preparing your business in a number of ways from deal structuring advice to introducing other advisers and assisting with the planning and execution process. Effective succession planning should begin long before any actual exit.