Private Business exit strategies

Sarah Taylor Partner, Corporate Finance, PwC United Kingdom 01/10/18

As a private business owner at some point you will have to consider your exit strategy from the business, do you step back and transfer ownership or sell the business? For most people this will be one of, if not the, biggest life decision that will challenge even the most experienced business owners.

If you do decide that it’s time to de-risk or step back from your business, here a number of important considerations when beginning to explore your exit strategy:

  • Defining your objectives - being clear with yourself and your advisors around what you are aiming to achieve from an exit for both you and the business
  • Buyer - finding a suitable buyer is of course one of the critical steps and while broadly speaking you have the option between a trade or a financial buyer, UK based or International, each will bring their own vision for the business, experience and method of financing the deal. Maximising the offer on day one may not provide you with the greatest value and may not be conducive to the business’s success going forward
  • Timing - to maximise value and minimise disruption to the business the exit process needs to be tightly controlled, driven by thorough planning and effective communication. The strategy to sell must consider the impact it will have on the business’s short term trading as well as the personal impact on employees, ensuring that employees are retained and rewarded where appropriate. Timing an exit correctly will need to be driven by both internal business cycles that will show buyers where and when growth initiatives are coming through and also be cognisant of whether key buyers are ready to make acquisitions
  • Value drivers - what will potential buyers be looking for in your business and what makes your business unique, what are the specific market opportunities as well as the wider macro drivers? The risks must be confronted and the strengths clearly articulated to help prospective buyers
  • Position your business - preparing the business for sale is as important as planning the transaction itself and will help to enhance value even as you move through the transaction process. Preparing the appropriate personnel, systems, available data and business plan will give you the best available information that will assist negotiations, reduce the chance of last minute surprises, reduce distractions on operations and ultimately lead to a more informed decision to accept an offer or walk away
  • Structuring the deal – ownership can be transferred and value released through transfer / sales to current family members or employees, Minority Sales, recapitalisations, sales that allow you to retain partial ownership or management control as well as IPOs or MBOs. Each option or mixture of options will bring specific benefits and drawbacks so understanding each will help to deliver the optimal outcome

Seek professional advice

Hiring experienced and trusted advisors can help to add value both financially and practically; they will support you through what will inevitably be an emotional and demanding process for you and your team.

Ensuring that you have appropriate professionals around you that can support with the mergers and acquisition and transaction matters, as well as accounting, tax and legal will help to avoid pitfalls, prior to and during a transaction process. Trusted advisors can draw from their expertise and experience to plan an exit that aligns with your specific requirements and help to navigate through a process to facilitate a deal that both the vendor and purchaser are pleased with.  

Sarah Taylor is a partner in our Deals practice in the Midlands and has over 16 years' experience of advising on a broad range of both corporate and private equity transactions.

Click here to connect with Sarah on LinkedIn.

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