The Business Exchange Bath & Somerset Issue 12: Summer 2019 | Page 18

THE ULTIMATE EXIT GUIDE: SIX STEPS TO SELL YOUR BUSINESS Selling your company is likely to be the biggest business transaction of your life, as well as one of the most significant for you and your family. But we understand that for owner managers there’s never enough time in the day so, despite its importance, thinking about your eventual business exit can easily get pushed back – and back... This condensed guide for TBE written by Jim Shaw of Shaw & Co, helps you better understand what lies ahead of you, and, when you start to give your exit more attention, you’ll be able to access everything you need quickly and coherently. 1) Setting your magic number Calculate the minimum net return that will deliver total financial freedom for you and your family Something worth working for. -Tax compliance A clean, clear and compliant tax position will allay any fears your buyer may have about future or historic liabilities. 2) Setting your strategy You’ve made the decision to sell and set your magic number; now it’s time to create a clear road map. It typically takes one to five years to create this plan. The start of this journey involves gaining a solid understanding of your business valuation. -Personal tax advice With so much going on in the approach to a sale, it’s easy for owner managers to overlook fundamental tax matters. For example, while the availability of Entrepreneurs’ Relief is generally well-known, a lack of attention to its detailed conditions can devalue, delay or even prevent a transaction. 3) Growing from A to B To put your strategy into action you need the right tools and tactics. It’s your goal, but you won’t get there on your own. One of the first steps is to share your objective with your senior management team because they will play a crucial role in helping you reach it. But achieving it will ask a lot of them. Now is the time for a critical assessment of your team to identify any gaps that need filling. Attracting new talent and keeping existing management on board in the period to exit is critical, so incentivising them in a way that supports your exit plan is key. In most cases, some form of equity share is the best solution, but it is important to make sure that any equity incentive plan is structured not only to motivate your key people but also to avoid any additional liabilities or reduce the attractiveness of your company to a buyer. Remember simple is key in this area. An overly complex scheme will be a challenge for a buyer to unpick. 4) Getting ready for exit It’s time to get everything in order and leave nothing to chance. -Make yourself redundant You must demonstrate to buyers that your business can operate successfully without you. -Project the business plan forward You are selling the future performance of your business, so make sure you have it clearly mapped out for a buyer. -Due Diligence Having everything ready for your purchaser and their advisors will help to streamline the due diligence process and keep your sale on track. 0117 325 8510 18 THE BUSINESS EXCHANGE 2019 5) Doing the deal After all that planning and hard work, it’s time to do the deal. -Getting your timing right Even after months of long-term planning, short-term events can still knock you off course. In seasonal businesses, it will be probably be best to complete the sale just after the seasonal peak. The first reason is that you, rather than your buyer, will then capture the benefit of the seasonal peak. The second is that with strong sales just behind you, your buyer will have stronger evidence of your success than if you were in a sales trough. -Marketing your business You already know your likely buyers; now it’s time to get their attention. How will you present to and engage buyers to win their confidence and bag your biggest ever ‘order’? -Initial offers Consider your offers thoroughly. The highest price may not be the best deal for your business. 6) What next? Your plans have finally been realised, but now is not the time to lose focus. Over many years we’ve seen how owner managers can face lows as well as highs as they deal with life, post exit. That is one of the reasons why we started The Charlotte Club, an invitation-only suite and roof terrace above our offices where we host events and bring people together to keep in touch, share past experiences and plan future ones. We believe in business being a force for good in society, so from the beginning it was very important to us to find an advisor who would keep our values at the top of the agenda. Shaw & Co have been excellent in helping us to find a partner and deliver a deal that will maintain our ethical and environmental promises. At every step of the journey, through the build-up to our sale, and in the subsequent acquisition by Unilever, Shaw & Co worked with us to protect and champion Pukka’s values and mission. They have helped us find the right home in Unilever, and to create an exciting future for Pukka Herbs. For purpose-led businesses in the South West seeking to grow I recommend Shaw & Co. TIM WESTWELL CEO and Co-founder of Pukka Herbs Download the full version of the Ultimate Exit Guide by visiting the ‘Exit’ area of the Shaw & Co website. [email protected] www.shawllp.co.uk