Planning for an exit is a crucial step for any business owner. Whether you’re looking to retire, move on to new ventures, or simply maximise the value of your hard work, having a solid business exit strategy is essential.

Each business owner is in a unique position, both in terms of the performance of the business at any one time and their personal aspirations for their own lifestyle. This means there is never any ‘one size fits all’ approach for an exit and there are often multiple options and approaches to consider.

Business succession planning

There may be a second generation coming through within the business, or a tier of management who you believe is capable of taking the business forward. You would therefore need to consider the financing, taxation and practical impacts of succession planning, once the applicable individuals have been identified. This may be higher on the agenda following the changes to Business Property Relief (BPR) announced at the 2024 Autumn Budget.

Capital injection

Alternatively, the business may need an external injection of capital to allow it to take advantage of growth opportunities in the market. Depending on which approach or partner is identified, there may be trade-off’s eg a loss of control or additional disclosure or regulatory requirements.

Selling your business

Conversely, you might have been all-consumed with running the business for such a long time, that you may want to seek to exit completely and find a new home for the business to thrive, in which case a trade sale would likely be the preferred option.

Selling a business to the employees via an employee ownership trust is becoming an increasingly popular option. For more information, please read Business succession planning or reach out to Saffery to understand how this could be achieved in practice and its implications.

What’s important to a potential buyer?

If a sale to a third party is your intention, it’s crucial to understand what potential buyers are looking for. Some key considerations include:

• Strong financial performance: buyers will be interested in businesses with a track record of strong financial performance and growth potential. This includes ensuring a stringent management account process that can withstand the examination of potential investors and understanding and articulating the financial performance of the business. This needs to be readily available and on request rather than pulling information together throughout the process which can put you on the back foot.
• Robust internal controls: effective internal controls and risk management practices are attractive to buyers as they reduce the risk of future issues.
• Clear strategic vision: a clear strategic outlook and growth plan can make your business more appealing to potential buyers and help in negotiations if the deal involves earnout. We explore the factors that enable a business to grow in a separate article.
• Knowing the key personnel: the difficult part of selling a business can sometimes be stepping away. Therefore, it is important to fully understand the key management personnel which will help to give confidence to a purchaser that the business can operate without you.

Maximising shareholder value

At the heart of any exit strategy is the goal of maximising shareholder value. This involves not only increasing the financial worth of the business but also ensuring that the transition is smooth and beneficial for all stakeholders.

As a business owner, it’s important to consider how you can maximise the value you receive from the sale or transfer of your business. This includes:

• Ensuring your house is in order: conducting a pre-sale review of current systems and structure can help identify any financial or operational issues that need to be addressed before the sale.
• Consider a voluntary audit: even if your company does not breach the audit thresholds, a voluntary audit, finance function review or exit-readiness support can offer several benefits and will help enhance stakeholders’ confidence in the company’s financial reporting.
• Understanding and managing tax risk: regular PAYE and VAT health checks can help manage tax risks and ensure everything has been considered and actioned prior to any due diligence to mitigate the risk of ‘price chips’ or retentions during negotiations.
• Utilising company tax reliefs: take advantage of available tax reliefs such as capital allowances and R&D reliefs to enhance the value of your business.
• Pre-transaction restructuring: consider the likely structure of a sale, any assets you may wish to retain/those a buyer may not want to acquire, and potential reliefs that could be available on a sale such as Business Asset Disposal Relief (BADR) or substantial shareholders exemption. There may be considerable benefit in restructuring well in advance of any transaction.

Choosing the right advisers

Whatever happens, don’t underestimate the intensity of a deal process. Once you’ve pushed the button, it will be like being on a runaway train, both emotionally and practically. It is imperative that you have the right advisers around you to meticulously plan and prepare the business before you ‘push the button’. It will become apparent through that planning process as to whether you really do have the required skills in-house to go through a successful transaction.

One key consideration is the potential impact on the business of having senior people effectively performing two roles through the due diligence and deal negotiation period. However, with the right advisers around senior management then any business interruption can be kept to a minimum and the business can continue operate effectively.

If you would like advice on optimising your business prior to a sale, please contact Jamie Lane or Matthew Trowbridge.

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Name: Elisa Cordial

Role: Audit Assistant

Time at Saffery: 18 months

What’s the best bit about your job?

The best part of my job is the learning experience I get as an apprentice, studying to become a Chartered Accountant through the ICAEW ACA qualification. Being able to apply technical knowledge in real-world scenarios has significantly enhanced my learning and development.

Working in the audit team at Saffery LLP is particularly rewarding because I get to visit clients on-site and gain insights into a variety of businesses. This exposure not only broadens my understanding of different industries but also allows me to meet new people and build valuable professional relationships. The diversity of clients means no two days are ever the same, making my job exciting and fulfilling.

The culture of Saffery is really important to the business and the people within it – what do you think you bring to the team and what do you contribute?

I have always enjoyed problem-solving and thinking outside the box. Within the audit team, it’s crucial that team members feel confident to bring new ideas and challenge the status quo. I contribute to an environment where innovative thinking is encouraged and valued. Additionally, I strive to support my colleagues by being approachable and open to their suggestions, which strengthens our collaborative efforts and drives our collective success.

If you weren’t doing this role, what might you be doing?

If I weren’t in this role, I would probably be a dog walker. I love being outside and spending time with animals, so it would be a perfect fit for me. Plus, it would be an advantage to be able to take my own dog to work every day!

What do you enjoy doing outside of work?

Outside of work, I love spending time with my 2-year-old cockapoo. She needs lots of exercise, so we often explore new places. It’s a great way to unwind and enjoy the outdoors. Additionally, I have a horse that I compete with in dressage whenever I have the time.

Tell us something about yourself that we don’t know.

In a couple of weeks, I’m going on a horseback safari in Botswana. It’s been a lifelong dream of mine to go on safari, and I booked this trip as a treat to celebrate finishing my Professional level exams. I believe it’s crucial to have something exciting to look forward to, especially during study periods.

Who or what inspires you?

I am inspired by people who demonstrate resilience and a positive attitude in the face of challenges. One such person is my Mum, who has always encouraged me to push beyond my limits and embrace new opportunities. Their unwavering support and guidance have been instrumental in my personal and professional growth. Additionally, I find inspiration in nature and animals, as they remind me of the importance of balance, patience, and perseverance.

What’s your favourite place in Dorset?

My favourite place in Dorset is Lulworth Cove. I love spending a day there because it feels like a mini holiday. A perfect day out for me includes a walk along the coast to Durdle Door, followed by a relaxing pub lunch. The stunning views and sea air make it an ideal escape.

Give 3 words to describe yourself.

Adaptable, supportive, adventurous