There are many reasons to dispose of a solvent business ranging from retirement, a change in personal circumstances or merely a desire to do something different. The decision to sell can be a difficult one as is finding a buyer and getting the price you feel it deserves, as you will probably have built up the business over several years with significant effort to make it a success.
Planning ahead for your exit will ensure you maximise value and ensure you leave the company in good hands, with potential job security for employees working with the new owners.
More than half of businesses in the UK are family owned yet surprisingly few of them have a succession plan. However the sooner a succession/exit plan is formulated, considering issues such as tax implications and legal obligations, the easier its eventual implementation.
This will also make it more attractive to potential buyers.
Planning for the sale of a business can be complex. A professional corporate advisor will be able to assist on matters such as tax planning, strategy, growth, profitability, value and legal issues to ensure the right outcome is reached at the appropriate time.
Management Buyout (“MBO”)
If you are confident in the ability of your management team, then transferring the business to them may well be the best solution. This option is frequently used by family businesses as the management are often best placed to take the business forward due to their knowledge and expertise. There is also the additional incentive to ensure success, due to their position as stakeholders, and the relative ease with which the transfer can take place.
Management Buy-in (“MBI”)
Management buy-in is becoming more popular, whereby management teams identify acquisition targets and subsequently invest in an equity stake. This can be the precursor to an eventual but-out as the new team look to grow the business and ultimately their stake to a point of acquisition.