Collaboration is key: business exit strategy planning

 

Building relationships with other service providers is crucial for Rubric because we know that’s the environment where the best work happens. As part of this, Shabnam, Corporate & Commercial Solicitor is working with Simon Jones, Chartered Financial Planner from Unividual and has contributed to their recent Business Exit Strategy Guide.

What is a business exit strategy?

Simply, a business exit strategy is the detail of how a business owner will leave the business. Selling, family succession and liquidation are a few of the options that most people have heard of when it comes to exiting a business.

Does every business one?

Yes! Having an exit strategy in place is important for any business, but it is often overlooked – especially by young businesses where the shareholders may not be considering if they’d ever want to leave! However, it is an essential building block of any business and key to futureproofing.

Who in the business needs to be involved?

If there are multiple shareholders then all should be involved in the strategy. It’s important to know each shareholder’s intentions and be open with each other on what these are. If a shareholder wants to be a lifetime business owner then plans need to be made for selling the business on retirement. Or, a shareholder could be looking at the business as a short-term investment and plans to sell/buy the shares should be considered. One way to start the business exit strategy conversation is to draw up a shareholders’ agreement, as well as other things, this document outlines the detail of what happens when a shareholder wants to exit the business.

What needs to be considered before an exit?

The timing of a sale is important and if considered can help increase the value of the business. A well-run company will be more attractive for a buyer, so it’s worth investing time in making sure you’re compliant where you need to be, any contracts are up to date and that operations are sound. The buyer will want to complete a thorough investigation of the company. Doing this early on will also support the due diligence process of a sale later down the line. Another key consideration is whether a shareholder wants to remain involved in the company following the sale. If so, consider the pros and cons of employment vs. consultancy and what level of involvement is best.

What professional services should be involved in a business exit strategy?

Simon Jones explains that “it is key that any business owner surrounds themselves with the right team, typically this would include a solicitor, an accountant, and a chartered financial planner”. Simon’s skillset means he can assess the financial framework and funding of safety measures. As a law firm, our experience of business sales will guide you through the legal aspects but it is crucial to engage with a financial service provider.

Talk to Shabnam today to discuss planning your business exit strategy

Shabnam.komayli@rubric.law

01454 800 008