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Maximising value with a future exit in mind

The value of your business upon exit can have a huge impact on your plans for the future and retirement. Many business owners hold off creating an exit plan until it’s too late, rushing into a transaction and preventing themselves from achieving the greatest return. 

Building an exit plan will allow you to decide which route is best suited to you and your business, maximise value upon exit and give you the confidence you’re leaving your business in the right hands. See below our top tips for maximising value with a future exit in mind:

1. Decide what your goals are

Firstly, you should consider what you are trying to achieve in the next 12-18 months or longer. This will focus your mind and plans, so that each business decision you make ensures you move towards your goal(s). What does an exit look like to you, as there are many different transactional options to realise value. And if you have an exit valuation in mind, whether it’s £50m or £100m, get an understanding of whether this is realistic by speaking to an adviser.

2. Understand the art of value

Many entrepreneurs try to determine the value of their business by using a multiple of their profit figure or a number they have in mind from the news of a similar sale. But when selling a business, non-financial factors also need to be considered. We often see key value drivers missed and owners undervaluing their business, preventing them from achieving the greatest return. Click here for more information. 

3. Get to know your prospective purchasers

Whether Private Equity or a Trade Buyer, who is the most likely acquirer of your business? Are you a data-driven company, or a people business? Whoever would benefit most in terms of synergies and value from acquiring you, will typically pay the highest price so it’s worth putting yourself in their shoes and establishing what your business will add to their portfolio. There are numerous benefits to starting to build relationships with those in your industry early on, who may one day become a prospective buyer.

4. Put your business under a microscope

During the course of any sales process, regardless of who your purchaser is, the transaction will shine a bright light on every aspect of your business, from your financials to your operations. It is worth engaging an external party to carry out due diligence on your business ahead of an exit, when you will be under significant scrutiny. This will give you enough time to clear out any skeletons in your closet and put a plan in place to improve on any weak areas discovered through the process, which could have an effect on business value. 

Considering these top tips will help you on your way to maximising business value, leading you to exit with the return you deserve. They will also increase the likelihood of a potential purchaser taking the first steps and approaching you before you’ve even put your business to market - and if they do, you will be fully prepared, with a solid foundation from which to negotiate the best offer.

Speak to our experts about our Exit Pathway programme, to help you plan for the future and achieve the best outcome from your exit, however far away that may be.

About the author

Meera Shah

+44 (0) 20 7556 1452

Speak to our experts about our Exit Pathway programme, to help you plan for the future and achieve the best outcome from your exit, however far away that may be.

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