Most business owners and entrepreneurs have some view of what they want to do with their companies once they reach retirement. Options include disposing of the company via sale, handing ownership down to a family member, management buy-out and buy-ins, stock market floatation and even voluntary liquidation. This final goal is usually facilitated by some form of exit strategy.
These exit strategies should be planned early, arguably as part of the initial business plan. Consideration to the exit should be given not only because it may determine how the business is structured, but also because it helps understand that succession and exit planning is a tailored process that requires planning, periodic reassessment and is rarely a single event.
Knowing when to walk away from your business is one of the hardest issues to face. For many, the heart still rules the head when it should be the other way around. Often a successful exit strategy needs input form a source outside of the company.
Top tips for getting the right advice
- Ask your bank manager, accountant or business colleagues to recommend corporate finance specialists with the appropriate expertise to suit your type and size of business.
- Try to find advisers who are the right size for your deal. There is no point in hiring people who specialise in selling £20 million IT companies if yours is a £2 million automotive component business.
- Invite 2 or 3 firms to pitch for your business. Ask them who they have advised and ensure that they have the right contacts in your sector.
- Only hire them if you think you can work with them. You need to feel comfortable with the individual(s) as you could be working closely with them for a considerable period of time and may need their shoulder to lean on if the situation becomes difficult.
- Make sure that you are speaking the same language. Many specialists are so focused on the technicalities of what they do that they forget that in this area you are essentially a layman. If they can’t communicate clearly with you so that you fully understand the process, don’t hire them.
- Ensure that you fully understand and agree the basis of fees to be charged by corporate finance advisers. Fees will normally consist of an up-front retainer with a success related element payable on completion of the site.
With the correct corporate finance adviser on-board from the offset it should be able to maximise the benefits of your exit plan and minimise the tax issues and red tape, leading to a more financially secure retirement, a pain free hand over of the family business or the necessary capital to invest in your next entrepreneurial venture.
For more information on the corporate finance services provided by PKF please visit http://www.pkf.co.uk/pkf/services/corporate_finance/home