A recent survey by Capital on Tap revealed that 79 per cent of small business owners do not have an exit plan.

The survey highlighted a mix of reasons behind the lack of preparation for an exit.

Emotional attachment was one of the strongest, with over a third of owners saying they could not imagine letting go of their business.

Others pointed to the difficulty of finding a buyer and the complexity of the legal process.

Why you need an exit plan

Having an exit plan in place allows you to prepare more effectively for an eventual sale, buyout or merger.

It gives you the opportunity to build value in line with your intended departure from the business so you can enjoy a better return.

Equally, life doesn’t always go according to plan. While many of you may not be ready to let go of your business now, illness, stress or sudden personal changes can force your hand at short notice.

The irony is that by trying to hold on too tightly for too long, many owners risk losing control of the outcome altogether and potentially devaluing their company.

Without an exit strategy, you could be left with little bargaining power or, in the worst-case scenario, be forced to close.

Exit strategy options:

Preparing an exit strategy requires careful consideration of all the options available to you:

• Do you want to seek a merger and acquisition transaction with another business?
• Would an Employee Ownership Trust (EOT) appeal to you?
• Have you considered a management buy-in or buy-out?
• Are there family members you would like to be your successor?

It is not safe to assume that a buyer will appear out of nowhere or that your children will want to take over one day.

You need to consider the legacy you want to leave, the financial outcome you hope to achieve and the tax implications of the different exit options.

If you are planning to sell your business, you also need to consider how you will prepare for the sale.

Are your accounts in order? Do you have a strong management team in place? Are there any issues that need fixing before the business goes to market?

Taking the time to plan now can help you achieve the best outcome and leave your business on your terms.

Contact us for expert assistance with your exit strategy.