Industry News
February 6, 2023
  •  
5 mins

Is my business ready for exit / sale? Do I need an exit strategy?

Selling a business is an exciting time, but it’s also one of the most complex and challenging processes that many small and medium-sized businesses (SME) will ever undertake. As a business owner, you want to make sure that you are prepared for exit in order for the process to run smoothly. So how do you tell if your business is ready for exit? Let’s dive into what you need to know. 

Know Your Numbers 

The first step in preparing for exit is knowing your company’s numbers inside and out. This means understanding your financial data as well as other key performance indicators such as customer loyalty and retention rates, market share, and more. Having these metrics on-hand will show buyers that your business is well-managed and profitable, which can help increase their interest in purchasing your company. Additionally, having this data will allow you to accurately value your business before putting it up for sale. Management accounts is a great way of keeping on top of your numbers.

Understand Your Options 

When it comes to the actual sale of your business there are several different strategies available. You have the option of selling directly to a buyer or using a third party like an investment bank or broker. It’s important to understand the pros and cons of each option so that you can find the best fit for your needs and goals. An experienced advisor can be invaluable during this stage of the process as they can provide guidance about potential buyers and offer advice on how best to structure the deal.  

We have seen a real increase in demand for employee ownership trusts (EOT’s) where you effectively sell your business to your employees.

                                     

Create An Exit Plan  

Once you know your numbers, understand the options available to you, and have enlisted an advisor, it’s time to create an exit plan. This should include short-term objectives such as cleaning up any financial records or streamlining operations as well as long-term strategies such as mapping out marketing efforts or developing new product lines that can help increase interest in buying your company now or in the future. By having an exit plan in place it will give buyers peace of mind knowing that they are investing in a company with clear goals going forward after they take ownership.      

Preparing for exit is no small task—it requires careful planning and research before putting up your business for sale. Knowing your numbers inside and out, understanding what options are available when selling a business, and creating an exit plan are all important steps towards ensuring that everything goes smoothly when transitioning ownership of your SME. Timing is key and you can never be too early in making a plan!

How can Gravitate Accounting help?

We also pride ourselves on the added value services including, where we can support here includes:

Outsource finance director services- Firstly we can do a detailed review in the planning stage so we can raise any flags. The issue is if they find issues down the line buyers will want to chip away at the purchase price

During the sales process you may not have the time to deal with detailed questions on numbers, so let us do this on your behalf. Much of it is often sat in your software.

Budgets and forecasting- much of the sale will be based on future potential so creating a forecast of where the business can grow is imperative.

Management accounts- buyers will want up to date figures so makes sense to prepare regular MI so they are always up to date.

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