There comes a time when every owner leaves their business. However, few plan properly for succession or an exit on their own terms. It is estimated that only 7 per cent of business owners have taken steps to plan their ultimate exit. This is despite 45 per cent saying they want to retire before they reach 50.
It is never too early to start thinking about exitin
Succession and exit planning is a tailored process that requires planning, teamwork and re-evaluation. The exit planning process helps you to identify your personal and financial goals and maximise your financial return when you transfer your business, while minimising your tax liability.
Understanding the exit planning process now can help you to run your business in a way that will make it easier to leave and that will ensure that it is in optimum financial shape when you are ready to exit.
Lastly, exit planning also helps to ensure that your business survives and that your family receives its full value if you die or become unable to run your business before retirement.
The following exit options are available:
· A trade sale
· Family succession
· Management buy-out (MBO) / Management buy-in (MBI)
· Going Public / Stock market flotation
· A member’s voluntary liquidation (MVL).
Unfortunately, many owners follow a “keep going until you drop” approach. This is the worst possible way of leaving your business.
If you suddenly decide that you want to leave the business, the deal that you are likely to secure will probably leave you with a lot less than if you had planned your departure in advance.
The second biggest mistake that business owners make is to assume that leaving the business will be easier than setting it up.