Is the exit just about you?
Business owners have various reasons to consider exiting their business from wanting to retire to seeking to develop a new business. Whilst many owners are accustomed with setting goals for their business, many may not be ready to set goals for themselves, in particular post exit.
For an entrepreneur to plan for a successful exit, some aspects to consider include:
- Allowing yourself time to plan the next stage of your life (this may be measured in years)
- Acknowledge the criteria that defines a successful exit to you
- Be honest with yourself on what you want to do with the next stage of your life
- Assess the various exit options the market may present to yourself
Emotional
Whilst numerous owners may have the financial means to retire, they may consider not to, including the often-mentioned reason that they are indispensable to the business. Whilst it may be true in very limited circumstances, a plan must be activated to emerge from this ‘indispensability’, as this leaves the business vulnerable.
A business owner has generally dedicated considerable resources and time to building their business from, missing family gatherings, to foregoing some of life’s necessities to ensure that the business is a success. In addition, many persons begin to associate the success of the business with one’s own status.
In addition, a number of owners would like to see their legacy continue under the new business owner. They may negotiate to maintain a minor shareholding in their company and/or directorship or advisory roles for the foreseeable future.
Exiting a business needs to be seen as not the termination of your entrepreneurial drive but merely the completion of another chapter.
Post exit
In preparation for post-exit business owners will need to estimate both their financial needs and also how they will spend their new found time, unobligated from the business’ requirements. Though the sooner one begins assessing these concerns the firmer position they will be in, specifically due to the amount of time and planning needed for a successful exit.
Very often business owners also have intrinsic non-cash benefits from their companies, such as health insurance, entertainment allowance or travel. Thus, part of their exit strategy will need to factor in how their quality of life will be maintained.
Furthermore, it is often advised to bring in a specialist to appropriately calculate the value of their company. Allowing any negotiating to start from a structured perspective.
Exit strategy
An exit may take numerous formats, though the most popular are merger, acquisition, management buyout, and the simplest being a liquidation. Throughout the process the owner must bear in mind that it is a long process, it will be challenging, though necessary to allow for the next stage of their and the company’s development.
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Feel free to contact idisav to discuss your exit strategy.
idisav’s founder, Thomas Cremona, a qualified accountant and endurance athlete, has undertaken the exit process from an entrepreneur’s perspective with a company he had founded and successfully exited.
+356 9983 7454 | http://www.idisav.com | thomas@idisav.com
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