You’ve spent your life building your business but what happens when it’s time to move on?
Most entrepreneurs don’t contemplate the end, but endings are as sure as beginnings and planning your exit well in advance can ensure the story ends the way you want it to, for you and your business. Here are some of the exit options available:
Trade Sale
It is possible to make your exit by way of a sale of your business to a third party. This can be by way of a sale of the shares in the company or following a sale of its business and assets.
This method is most suitable to owners that wish to exit but, at the same time, create an opportunity for a larger merged group to move forward with the benefits that can bring.
Management Buy Out (MBO)
If the business has an effective management team in place, a purchase of the company by that team can provide an alternative to a trade sale. It can provide a smooth transition of power with little disruption as the new owners will have become familiar with its operations, customers and suppliers prior to the buyout.
This can sometimes provide a company with the impetus to move to the next stage in its development under new ownership.
Private Equity (PE) Investment
Your exit could be affected by the introduction of a private equity fund as an investor. PE can breathe new life and introduce considerable experience into the business.
However, understandably, PE investors will insist on taking an extremely hands on approach, exercising a controlling influence on decisions.
Flotation
You could float the business, placing the shares in the company on the stock market. The two main markets are London Stock Exchange and the Alternative Investment Market (AIM).
AIM is frequently the preferred exchange for newer and smaller companies due to its more straightforward and accessible procedures. Nevertheless, there is extra regulation and red tape. There may also be internal restructuring steps required.
Liquidate and close
A final and last resort would be to go through a solvent winding up of the company. The assets would be realised, and creditors paid off, with the surplus distributed to shareholders. The main negative is that employees would lose their jobs and there can be a knockon reputational impact.
Enjoyed this? Read more from Nick Hodgson, Forbes Solicitors