Your Business With James Caan 2017 - 313
BEGIN WITH THE END
IN MIND Don't leave it too
late to plan your way out.
KEEP YOUR EXIT
REVIEW Treat it as you would any
other part of your business plan.
THERE ARE MANY
WAYS TO ADD VALUE
TO A BUSINESS From boosting
profits to strengthening your brand.
WHAT'S RIGHT FOR
ONE OWNER MAY BE
WRONG FOR ANOTHER Stick
to your guns and trust your plans.
COULD DEVALUE THE
BUSINESS Don't let a loss-making
contract or a non-patented product
slash your firm's worth.
However, it requires a lot of skill
and hard work to get right.
"Think of this process like selling a
house," says James. "Would you start
bringing potential buyers around for
viewings before the walls were painted
and the large cracks covered?"
As well as making sure you have
strong senior managers in place to
give buyers confidence, it is important
to look at a range of metrics.
"The value of a business is achieved
in a number of ways," says James.
"There are many tangible factors
- profitability, the strength of the
order book, the number of long-term
customers, property and assets - but
also things such as the strength of
the brand, which may not be as easy
to quantify, but can have a huge
effect on how you're viewed."
When negotiating a sale, remember
you can use earn-out clauses to ensure
you receive further compensation
should the business go on to meet
certain financial targets after your
reign ends. This is similar to the deals
that see football clubs buy strikers for
£5m plus £1m if he scores 50 goals.
If not selling to one organisation,
you can attempt to capitalise on the
value of your business by selling to
many, via an initial public offering.
An IPO - or launch on the stock
market - gives the public a chance
to buy shares in your company.
This is a high-risk strategy because
it requires costly procedures and there
is no guarantee how your business
will be valued by the market. Again,
a raft of due diligence is required,
but if you set your sights on it
early enough an IPO could prove
a very successful exit strategy.
Paul Simon once said there were
50 ways to leave your lover, and there
are probably just as many methods
of departing your blood, sweat and
tears business. The key is to identify
your preferred strategy and do
the preparation work early on.
"Every situation is unique since each
[owner] will have different objectives,"
says Fentress. "Optimising the outcome
depends on a carefully thought-out
and well-planned exit strategy."