How to take control of your finances with a business exit strategy

When deciding to sell or hand over your business, it can be difficult to know how to prepare and when the right time is to do so.

With interest rates and inflation rising, understanding the current market and preparing your business for the best possible sale is important.

By planning a clear business exit strategy, you can get your finances and operations in order and potentially increase your financial return.

What are your business exit strategy options?

A business exit strategy is a plan for passing on ownership and reducing your involvement in the company over time.

Planning can start two to five years before your exit and requires consideration of who you will sell or pass your business on to.

There are many types of business exit strategies and understanding what is financially best for your business is crucial.

These options include:

• Merger or Acquisition (M&A) – Selling to another business or competitor
• Management buyout (MBO) – Your management team buys the business
• Employee Ownership Trust (EOT) – A tax-free exit strategy for business owners to pass on control of the business to a trust for the benefit of all employees
• Family succession – Passing the business onto a family member
• Selling externally – Selling the business to an unrelated buyer
• Liquidation – Closing the business and selling the assets, but this may subject you to Income Tax on distributions above £25,000

How to make the most out of your exit strategy?

For business owners, putting a clear plan in place can ensure the continuation of their business and prepare employees and partners for the change in operations.

Making sure your business operations are not reliant on you and can be handed over smoothly can help increase both business value and buyer confidence.

If you are leaning towards an external offer, identifying who your ideal buyer is can also give you a better understanding of valuation and pricing.

A professional valuation can also provide clarity on where your business currently stands and create a plan to maximise your returns when you decide to exit.

With early planning, you can reduce risks and identify potential issues in advance to avoid any last-minute crises that stall or derail your exit.

How to financially benefit from your exit strategy?

As the Autumn Budget approaches, many businesses will have to consider whether they will remain profitable after the announcement or if the extra admin introduced by changes in tax thresholds or Companies House will make it too much trouble.

Staying informed on the current market and changing policies can be overwhelming and with an exit strategy taking two to five years, it can be hard to know the right time to leave.

With the right financial help, you can make the most out of your sale and improve your tax efficiency when selling or passing on the business.

Our team can guide you to achieving the best possible valuation and assess which exit strategy and buyer will benefit you the most.

For expert financial advice and support, contact our team today.