Kevin Uphill, chairman of Avondale, offers his top tips on business exit strategies
Growing a company to sell for prosperity is almost certain to generate wealth, yet the odds can be stacked against you. Business owners are able to influence the odds. Knowing when to stick or fold is a key part of business strategy and the timing of an exit is critical.
1. Ideally try to sell before you peak, before the next wave of investment, with a great track record and when the market has prospects for your sector and you have a team able to drive growth beyond you.
2. It is also important to analyse the forecast net income you will receive, if you retain the company, versus the net sale capital you will receive. Bear in mind that sale capital will be certain whereas income will not.
3. Another useful contributing factor is having the luxury of time on a sale in contrast with ongoing commitment and hard work. Are you happy to invest heavily time-wise, or should you free up some time to pursue other interests?
Many owners inherently know when is right for the business, yet take a gamble and miss the window by which time it can be too late. But why? The main reason we have observed is the difficulty to be utterly objective about where the business truly is, in combination with being over-absorbed about individual needs, rather than what’s right for the business. In other words, it’s the right time for the company (and the CEO knows and feels this) but for the shareholders the sums are never quite right and the next initiative just needs finishing. They go against their intrinsic knowledge, believing ‘there could be a windfall around the next corner’.
Staying in the business for too long can also be driven by natural fear of the next personal journey. How many people miss the best time because they personally are not ready or don’t have the imagination to see the next personal game? It is vital to be objective, as many a deal is lost when the shareholders’ needs drive the timing rather than what is right for the business.
A recent survey Avondale carried out, among owners who had sold their business, confirmed one thing we have suspected – never once has the next journey been what they thought it would or should be, it has always been different yet often better than ever imagined. Look at the facts, take a personal leap of faith and walk out on a winning streak.
It’s never too late to consider positioning yourself and your business for a successful and lucrative exit.
On 14 May Avondale will sponsor a conference at 116 Pall Mall on the subject. Experts will share advice on which strategy best suits your company. To find out more, visit iod.com/exitstrategies
To hear about the latest opportunities for business growth and the possible challenges, a conference on 10 June at 116 Pall Mall will help you to understand how companies propel growth, gain market share and through digital technology. This conference is a must attend for anyone responsible for driving business growth. Visit iod.com/digitalconference for details.
Avondale will also be sponsoring a conference on 17 November at 116 Pall Mall, providing advice and guidance on buying and selling a private business. For more information, visit iod.com/buyingandselling
IoD members can access discounts from Avondale, the IoD’s preferred provider of business sales, mergers and acquisition services. To find out how Avondale can help you call 01737 234892, email Avondale or visit iod.com/buyandsell