Business Exit Planning: A case study.
Three years ago, I was approached by business owners who wanted advice on exit planning. The owners had built up a successful business over 20 years and were now in their late fifties. The business is a leader in its field and operates with a high level of professionalism. The owners felt strongly that their ethos should continue after a sale. It was therefore important who they sold the company to. With the agreement of the owners we initially carried out a low key marketing exercise. This consisted of identifying a small number of potentially interested parties and contacting them in confidence. This generated a number of meetings with potential purchasers, but none were considered an appropriate fit.
The next stage was to consider whether a Management Buy-Out could be a realistic option. The owners hadn’t originally thought that the existing management could form a Management Buy-Out team, but on reconsideration decided to raise the prospect with them. In order to assist the management team in deciding whether this option was something they wanted to pursue further, we arranged for them to undertake a training session for potential Management Buy-Out candidates. This was led by Kirsty McGregor (Chairman of The Corporate Finance Network). The team subsequently decided that they couldn’t make the financial commitment involved. Shortly afterwards the owners were approached by an ex-PLC senior executive offering his consultancy services. He was initially engaged on a short project in order to assess whether he might turn out to be a suitable acquirer of the company. This arrangement worked well and a year later, after much negotiation, the company was sold to a team headed by him.
This case had a very positive outcome but illustrates the importance of starting Exit Planning in good time. Using an advisor with specialist corporate finance knowledge is essential in guiding owners through a successful exit of their business.