Exit Planning

24th January 2017

We have set up a specialist corporate finance team to offer bespoke services in exit planning, including assisting with:

  • Timing the exit:
    • To fit in with your personal goals.
    • To show a record (ideally, 3 years) of growing maintainable earnings and profits.
    • Having a three-year business plan in place which includes strong revenue and profit goals, along with corresponding plans to drive and support growth in areas of sales and marketing, product/service delivery and finance. This plan should estimate the size of the market opportunity and have forecasts for growth based on what extra resources or expertise a purchaser could bring to the business.
  • Exit tax planning , including, where relevant:
    • To ensure (consider advance clearance from HMRC ?) entitlement to Substantial Shareholdings Relief
    • To ensure entitlement to Enterprise Investment Scheme CGT exit tax relief.
    • To ensure avoidance of possible De-grouping charges.

  • Deciding whether you are selling the business as a self contained company (ie shares) or just the individual business assets (including goodwill). 
  • Creating the ‘ideal’ business for a purchaser:
    • Diversifying your customer base, so that no more than 15% of revenue is derived from your largest customer.
    • Creating a model where customers purchase your product or service more than once per year and pay up-front.
    • De-personalise the business model, so that you do not need to customize products, services or methodologies for individual customers.
    • Creating a business model where you product or service is easily teachable to your staff.
    • Supplying a product or service which is highly valued by your customers/clients.
    • Once you specialise in something, you can then hire specialist staff.
    • Make something unique about your process, so that you ‘own’ it when pitching.
    • Have a sales team of at least two, to create natural internal competition (these should be people who are good at selling products, not services).
    • Having a scaleable business.
  • Structuring the business to operate without you:
    • Establishing strong middle management. Motivate them with a long-term incentive plan. Only give away equity as a last resort.
    • Creating financial controls for post sale, when you are no longer involved. Setting up this structure will involve ‘systemising’ all of the aspects of managing the business, so that, one by one, they do not require your input and creating a long term financial incentive for key individuals to stay with the company.
    • Creating a ‘prospects channel’ where no more than 10% of new revenue is a direct result of your personal sales efforts.
    • The more the business can operate without you, the less likely that part of the sale consideration will be an earn out or deferred consideration.
  • Control over the occurance and timing of discretionary spends
  • ‘Tidy up’ the business:
    • Formalising existing customer, employment and other trading relationships.
    • Ensure all legal and tax compliance is up to date.
    • Eliminate potential deal-breakers (eg. ongoing litigation).
    • Cessation or splitting of loss making activities.
    • Remove ‘personal’ and ‘mixed’ transactions and assets from the business.
    • Ensure most efficient/saleable structure.
    • As most purchasers will try and structure the deal so as to fund the purchase price out of future ‘target’ profits, the balance sheet should be handed over in a condition that will be conducive to such finance raising.
  • Creating a culture which minimises staff turnover.
  • Optimising the ‘Picture’ presented of you on the public record:

    • Submitting full (instead of abbreviated) accounts at Companies House.
    • Improving the information that can be found on you through simple desktop research (your website, blogs, etc)
    • Ensuring that your accounts are prepared with accounting policies that are consistent with industry norms.
  • Preparing a ‘sale pack’, ready for purchaser due diligence.
  • Find an advisor for whom you you will be neither their largest nor their smallest client. Make sure they know your industry.
  • Strategies for attracting approaches from potential purchasers (try and create competition into this process).
  • Creating the sale team and documentation and preparing for a smooth due
    diligence process.

The earlier the grooming process commences, the better and the more robust the company will appear under future due diligence scrutiny. Instruct us to undertake this corporate finance work and you can rest assured that all of the multi facets of this complex area will be taken care of, to your best advantage. Experience, contacts and inside knowledge are the pre-requisites of good corporate finance advice.



 
Other items in Blogs
 
Stephen Malkin
21st January 2021 1-Mar-21: Are you ready for new VAT Domestic Reverse Charge rules for construction services?

VAT registered businesses working within the construction sector should be aware that new reverse charge VAT administration rules are being introduced wef 1 March 2021 (delayed from original October 2019 launch date). The Government announced in the 2018 Budget that they are trying to reduce missing trader fraud; where builders collect VAT from their customers…

Read More »

Richard Alecock
13th January 2021 Information on local business grants from West Suffolk Council

Find out the up-to-date information on local business grants from West Suffolk Council during the COVID-19 pandemic:   COVID-19 support for business – grants (westsuffolk.gov.uk)

Read More »

Jonathan Moore
8th January 2021 New lockdown grants to support businesses and protect jobs

On 5th January 2021 the Chancellor announced new one-off top up grants for retail, hospitality and leisure businesses worth up to £9,000 per property to help businesses through the new lockdown.   The one-off top-ups will be granted to closed businesses as follows:   £4,000 for businesses with a rateable value of £15,000 or under…

Read More »

Chris Kelly
8th January 2021 Wrongful Trading Liability Suspension – Renewed 26 November 2020

In March 2020 the Government temporarily suspended wrongful trading provisions until 30 September 2020.   The purpose of this measure had been to ensure that company directors could continue to operate during Covid-19 without worrying about becoming personally liable for wrongful trading.   On 26 November 2020, following the 2nd lock down, new legislation came…

Read More »

Jaimie King
4th January 2021 Coronavirus loan scheme deadline extended

On 17th December the government announced a further extension to the Coronavirus Business Interruption Scheme loans (CBILS) – meaning that businesses now have until 31st March 2021 (previously 31st January) to apply.   This welcome announcement means that more businesses will be able to enter the loan scheme, benefitting from the needed funds during these…

Read More »

Nick Edgley
18th December 2020 Don’t miss 31 January deadline for filing your Self-Assessment Tax Return

The New Year is approaching and so is the deadline for filing your Self-Assessment Tax return – January 31, 2021.  Our tax experts can ensure everything is completed accurately and submitted on time.   If you need help or advice with your tax return or any other accounting or financial matters, please contact your local…

Read More »