How business owners can prepare for a successful exit

For many business owners, the thought of selling is difficult to confront. Yet delaying exit or succession planning can reduce value, increase risk and limit options when the time comes.

Running a business can provide purpose, achievement, recognition, security, influence and structure, but it can also bring increasing levels of stress, pressure and time away from important people and experiences. No owner wants to reach complete burnout, and it does not need to happen.

By treating exit planning as a strategic transition into the next phase of life, rather than a one-off transaction, owners can strengthen both themselves and their business.

A successful exit will look different for every owner, but there are important business and personal considerations which should be recognised.

Personal readiness

• Knowing what “enough money” means for the owner’s desired next phase of life and how this aligns with their business goals.
• Being emotionally ready to hand over control to the next level of management.
• Being comfortable with others making decisions differently.
• Separating self-worth from the potential sale price of the business.
• Understanding what you will miss, and what relief the exit may bring you.
• Building an identity beyond being a business owner.
• Understanding what the sale will mean for family members, including both challenges and opportunities.

Business readiness

• Having a capable senior management team in place so the business is not dependent on the owner day to day.
• Ensure the senior leadership team stays with the business by offering bonus or equity arrangements as incentives.
• Protecting goodwill through robust restrictive covenants.
• Having financial reporting standards that satisfy lenders and withstand buyer scrutiny.
• Demonstrating that customer and supplier relationships sit with the business, not only with the owner.
• Supporting long-term resilience through robust contracts, reliable processes and a sustainable commercial model.
• Ensuring property arrangements provide adequate security for the short to medium term.
• Holding shares in a tax-efficient manner for exit.

Conclusion

The practical starting point is an exit-readiness review, covering business succession, leadership, contractual and reporting resilience, property arrangements, shareholdings and the owner’s personal objectives well before any transaction is imminent.

That process should not depend on one person alone. Geldards, working with the Exit Advisory Team, can provide a wide range of legal, tax, financial and commercial support needed to help owners plan well, protect value and move forward with confidence. If you would like to know more please contact Debra Martin.