Planning your successful exit: the GPS plan

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At some stage, as the owner of a business, you’ll want to get out. Whether that’s to pursue other interests, have more time to yourself, or to retire, the day will come when exiting becomes a reality.

So here’s our 3 point GPS plan for maximising the value of your business:

Grow it, Polish it, Sell it     


Grow it

  • Focus on improving profit

Improve your margins, eliminate inefficiency and strip out unnecessary costs

  • Create clear, long-term growth plans

Prepare strategic plans for sales and marketing to increase the level of activity, the quality of customers and the strength of the pipeline

  • Instil confidence in a buyer

Ensure the business has robust financial and operational management, with sound forecasting and reporting processes, and relevant KPIs (Key Performance Indicators) that provide a clear dashboard of both the past and the future

 

Polish it

  • Lock in revenue

Maximise the proportion of income that arises from long-term arrangements, such as maintenance/service contracts, rolling contracts and retainers

  • Make yourself dispensable

Reduce the amount the business relies on you, as the owner, for generating new sales, servicing key customers and technical know-how. And, of course, running the business – so spend less time on day-to-day activities

  • Clean up the finances

Reduce debt, draw out surplus cash, remove private assets and non-core expenditure

  • Reduce the risks

Reduce your dependency on key customers, suppliers and, internally, individual members of the management team – view risks from the buyer’s perspective

  • Identify the value

The worth of the business hinges on how much profit the buyer can make from it. Identify where future growth is likely to come from and the intangible benefits the purchaser will acquire

 

Sell it

  • Find the right advisers – for the business and the owners

Chose an advisory team, with a proven record, that can guide you through the many legal, tax, financial and regulatory issues and, most importantly, are people you can work with

  • Get the timing right

Ensure the timing is right both for you, as the owner, and the business

  • Anticipate objections

Be ready for likely objections raised by potential buyers and their value-reducing tactics, using your advisers to help you prepare and negotiate

  • Be prepared

Be ready to move on if you sell, and prepared not to sell if it doesn’t feel right (for whatever reason); having a strategic contingency plan strengthens your position. And be ready to consider an earn-out arrangement