Don’t gamble with your future – Plan your exit strategy

Dealing with business owners day in day out we find it startling how so few have have a considered exit strategy in place. Many believe that when the time comes to retire or move on to something else, all will simply fall into place. The reality is far from that and due to external market factors, timing and planning is crucial in this decision in order to receive maximum value for what will most likely be a business owners most valuable and prized asset.

Throughout the life cycle of the business, owners will have planned and deliberated over decisions big and small, investing time, money and effort into the business in order to nurture and grow. Considering the effort that goes into the development of a business it is staggering that many business owners fail to sufficiently plan ahead of their exit. For business owners, exit strategy planning is effectively an investment in themselves and their families. Whilst it is fully understandable that planning for an exit is at the back of most business owners minds, when you consider how time consuming the daily management of a business can be, in order to ensure the best end result for themselves and their families it is imperative that business owners make time to plan ahead.

So what is it that business owners need to consider when they finally get round to planning their exit? Well, in brief, the first thing that they must consider is the current market value of their business. Benchmark International have a team of dedicated M&A market specialists who closely study market conditions and variants relating to time specific market values of companies. Benchmark International offer company valuations as a free service so we strongly suggest that business owners take up this offering as soon as possible.

The next thing business owners should consider is their current net worth and their future objectives. Whether this be retirement or a change of direction in terms of business interests, business owners need to take into account their lifestyle and spending requirements. Wealth management specialists are the most appropriate people to speak regarding net worth and financial planning and Benchmark International are well placed to point business owners in the right direction given that we hold very strong relations with some of the worlds leading wealth management firms.

Taking the above points into account, a decision must be made regarding timing. Correct timing with regards to a company exit is a hugely important factor in determining the level of value received upon completion. A whole host of external factors dictate the correct time to exit including tax levels and market demand to name but two. Considering these two cases in particular, however, it would be wise for business owners to start taking proactive steps to consider their exit as soon as possible.

Demand for mid-market companies, which are perceived by acquirers as more easily attainable in current economic conditions, is extremely high with both corporate companies and private equity firms seeing huge benefits in the acquisition of mid-market companies. The high levels of demand coupled with readily available capital is creating a fiercely competitive atmosphere which is extremely positive for business owners who are currently receiving very high deal values. Also, taking into account the current uncertainty surrounding the tax situation in the US, particularly regarding capital gains, it is easy to see why business owners are seeing now as the perfect time to cash in.

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