Bio
Thomas Cremona, founder of idisav, is focused on assisting business owners with their exit plans. His professional background includes qualification in accountancy through ACCA, and working as part of the Advisory team in a ‘Big Four’ accountancy firm based in Malta. Thomas also brings to the table his own personal exit experience that he gained after he had founded, developed and eventually exited one of Malta’s leading property management companies.
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Unique position of accountants in exit planning
As accountants or as auditors, you are occasionally faced with situations where the business owners indicate that they may not wish to continue leading or operating their business. Such circumstances may stem from a lack of personal satisfaction from operating their business, changing markets, and other concerns. Typically, the lack of an effective succession plan exacerbates those critical phases in business continuity.
Based on years of trust in discussing the company’s ongoing performance, economic goals and strategy, the accountant is one of the few parties that business owners may feel comfortable sharing their concerns including the possibility to discuss exiting their company.
Exit planning decision
When the exit planning discussion does arise, apart from the potential for related professional engagements (such as restructuring, valuation, tax, and legal), one must also consider that the owner may have been building the company for several years, and thus would be emotionally attached to the business. The business owners may find themselves facing tough choices of whether to continue driving the company, even though they may not have the vision or energy to address current, and forthcoming, market and business challenges.
Thus, for the sake of the business’ future success, you may actually need to raise the discussion of what to many business owners is a delicate topic (and possibly unthinkable) – that is, the business continuing without the founder and/or owner’s involvement.
This discussion will raise a number of financial and emotional concerns from the owner. Whilst, as accountants, we excel at financial assistance, the emotional aspect is a more delicate process and, in some circumstances, may extend to the owner feeling a potential loss of identity by having been so closely associated to the company over the years, amongst other concerns.
In addition, the lack of an effective exit plan may lead the business owners to feeling a sense of frustration and, in some situations, helplessness at being unable to convert to cash the wealth they have built into their company.
When to exit?
Establishing an exit point is a delicate process, and many owners may be uncertain about their prospective activities following their exit from the business. Whilst some may be nearing retirement age, and look forward to a slower pace, others may wish to move onto another business or area of focus.
The exit process should not be viewed as an unforeseen course of action that is coming from a point of weakness – a mindset that is often encountered – but as another phase of a business’ natural cycle. Furthermore, a well-structured and governed business will provide an attractive opportunity for numerous acquirers who express an interest in it.
From the outset of the exit process, it is important to raise the point that preparing the business for an exit, especially if that business is considered to be an extension of the owner’s lifestyle, may be a lengthy process. The exit process will include addressing both emotional and financial aspects, identifying potential buyers, due diligence procedures and, ultimately, concluding the transaction.
100% Guarantee
There is a 100% guarantee that, at some point, all business owners will eventually need to exit their company either through succession or outright sale. As accountants, we need to encourage business owners to plan for this inevitability.
idisav 