Planning a business exit: Eight ways to maximise value and attract buyers

1Most business owners go into business planning to make profits and to maximise the value of the business ready for selling when they exit. Then many fail to either maximise or extract their business’ value, because they don’t have the strategy to do so. This should include a plan to ensure that the business is attractive and valuable and a plan for marketing and selling the business. Here are eight tips to focus on to help with your business exit:

  1. 1. ‘Size does matter’ – designing and developing your business to a level of turnover that will maximise value.
  2. 2. Ensuring that your business operation aligns with your business model and delivers, for example, in terms of customer service; online presence; the workforce; pricing strategy; materials and suppliers.
  3. 3. Recurring revenue is vital – do you have clients on long-term retainers, extended contracts or some type of residual income trail?
  4. 4. Is your business able to generate new business leads, enquiries and sales without relying entirely on you or one key person’s skills and sales ability?
  5. 5. Systemised businesses are far simpler to run, far less stressful and, generally, far less risky. They are also, therefore, normally more valuable.
  6. 6. Do you have an employee incentive plan whereby employees are rewarded based on performance? For example, either in a profit share-based plan or an employee share ownership plan. Such arrangements substantially reduce one of the key risks for buyers – that your employees will exit when you do.
  7. 7. Effective corporate governance and compliance can add considerable exit value (particularly when we look at attracting the right type of buyers) as well as reducing risk.
  8. 8. The business must be able to operate independently of your personal involvement. Taking all of the above separate points into account, is your business ready for when you are no longer a part of it?
Posted In : Business, Tips, Risks