How to Create a Business Exit Strategy

Planning your business exit is just as important as building your business. Whether you aim to sell, pass it on, or wind it down, having a clear exit strategy ensures you maximise value, minimise disruption, and secure a smooth transition. This guide walks you through the essential steps to crafting a robust exit plan.

Step 1: Define Your Exit Goals

Before developing a strategy, consider your objectives. Ask yourself:

• Do you want to maximise the sale price, ensure business continuity, or leave a legacy?

• What timeline are you working towards?

• Who is your ideal buyer—family, management, a competitor, or an investor?

Step 2: Understand Your Exit Options

There are several exit routes, each with advantages and challenges:

• Selling to a Third Party: Maximises value but requires preparation and market timing.

• Management Buyout (MBO): Keeps business continuity but may require financing support.

• Employee Ownership Trust (EOT): Encourages employee retention but involves legal structuring.

• Family Succession: Ensures legacy continuity but needs careful planning to avoid conflicts.

• Liquidation: A last-resort option that dissolves the business assets.

Step 3: Prepare Your Business for Sale

To make your business attractive to buyers, focus on:

• Financial Health: Ensure clean, transparent financial records and profitability.

• Operational Efficiency: Standardise processes, reduce dependencies on key individuals, and document workflows.

• Customer and Supplier Stability: Secure long-term contracts and diversify your client base.

• Legal and Compliance: Address outstanding liabilities, contracts, and intellectual property protection.

Step 4: Get a Business Valuation

Understanding your business’s worth is crucial. A professional valuation considers:

• Revenue and profitability trends

• Market position and competition

• Growth potential and industry outlook

A business broker or valuation expert can provide an accurate estimate and suggest ways to increase your company’s value.

Step 5: Develop a Succession Plan

If your exit involves internal transition, create a clear succession plan by:

• Identifying and training key employees.

• Establishing leadership transition timelines.

• Communicating the plan to stakeholders for a smooth handover.

Step 6: Plan the Sale or Transition Process

When ready to exit, follow these key steps:

• Find Buyers: Work with a broker or use industry networks.

• Negotiate Terms: Focus on price, transition support, and non-compete clauses.

• Conduct Due Diligence: Provide necessary financial and legal documents.

• Finalise the Sale: Work with legal and financial advisors to close the deal smoothly.

Step 7: Consider Your Post-Exit Plans

Once your business is sold or transitioned, plan for what comes next:

• Investing the proceeds wisely.

• Exploring new ventures or retirement.

• Managing any remaining financial or tax obligations.

Creating a business exit strategy is essential for maximising value and ensuring a seamless transition. The sooner you start planning, the more control you’ll have over the outcome.

Are you ready to plan your business exit? Contact our expert advisors for personalised guidance on securing the best deal for your future.