Your Business With James Caan Autumn 2024 1 - 377

YOUR BUSINESS _ AUTUMN 2024
Decision time
When the time comes to retire or move on, what do you
want to happen to your company? Will someone else take
it on? If so, will that be a family member, colleague or
someone else entirely? Will you sell the business? If you do,
how much are you looking to sell it for?
Do you want to take as much money as possible from the
business while you're there, or make it as profitable as you
can for a sale at the end? Will you control it tightly or create
management structures that will encourage the company to
thrive once you're no longer running it?
Answering these questions will allow you to run the
business in a way that makes sense, both during your stint in
charge and also when you leave.
We consider the different options more closely...
It's a wrap
Perhaps the easiest option is to simply close the doors and
walk away. Companies often hit the headlines when they are
wound up or liquidated owing to debts, but you can choose
voluntary liquidation as long as you're solvent. If you want
to retire or step down and you don't believe it's worth trying
to sell the company, you can go through a six-step process to
appoint a liquidator.
Family affair
Many businesses are passed down family lines, with a son or
daughter taking over the firm from their parents. As well as
the satisfaction of keeping something you've worked hard to
build in your family, this option can allow you to continue to
play a reduced or advisory role.
Selling up
You may decide to sell your company to a competitor, an
investor or a management team - or, ultimately, anyone
who has the cash and meets the legal requirements. This
option releases you, the owner, from any responsibilities and
will ideally leave you with a cash sum. But it requires a lot of
skill and hard work.
" Think of it as similar to selling a house, " says James.
" Would you bring in potential buyers for viewings before the
walls were painted and the cracks covered? "
As well as making sure strong senior managers are in
place to give buyers confidence, it's crucial to look at metrics.
" The value of a business is measured in a number of
ways, " says James. " There are many tangible factors -
profitability, the number of long-term customers, property
and assets - but also things such as the strength of the
" The exit process
can be complex
and emotional "
" Having a clear exit strategy is essential if you
want to sell your company for as much money
as possible. The more prepared you are, the
more likely it is that exiting your business will
be a happy, regret-free process.
" In planning your exit, there are three
important questions that you need to
consider: what do you want out of your
business, when do you want to exit and who
do you want to sell your business to. If you
know the answers to these questions you will
be able to exit your business on your own
terms. You'll also able to make decisions that
build a better, stronger company while you
are still in charge.
" The key to planning a successful exit is to
determine how much money you'll need to
maintain your desired lifestyle after leaving the
business and understand your business's
current transferable value. Then, focus on
growing the value of your business to make it
more attractive to potential buyers and bridge
the gap between its value and the amount
needed for your ideal lifestyle.
" To increase the transferable value of your
business, it's critical to focus on the factors
that drive profitability, growth and the strength
of your company. This will result in you selling
your business at a higher price. "
377
brand, which may not be as easy to quantify but can have a
huge effect on how the company is viewed. "
When negotiating a sale, you can also use earn-out clauses
to receive further compensation, should the business go on
to meet certain financial targets.
Going public
If you're not selling your company to a single organisation
or individual, you can attempt to capitalise by selling
your business to many, via an initial public offering (IPO).
Also known as 'listing' or 'floating', this is when a private
company makes its shares available to the public on the
stock market for the first time.
Selling your own shares during an IPO will end your stake
in the company. It's risky because costly procedures are
required and there is no guarantee the market will value
your business highly. Due diligence is required but, given
the right circumstances, this can be a successful option.
DEPARTURE TIME
It's vital to understand yourself and your
business when planning an exit, says James
Jones, M&A adviser at Ten XGrowth
EXPERT VIEW
Your Business With James Caan Autumn 2024 1

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