How you can have two bites of the cherry when looking to exit from your business

Many of you have spent a substantial part of your lives building and nurturing a business which by all accepted metrics is well run and successful.

A big pat on the back too, for having the foresight to recruit and develop a capable, disciplined, ambitious management team which releases you to focus on driving strategic initiatives and occasionally grab precious time for reflection and recreation.

Exit

Deep down, however, you know that you cannot put off addressing your exit, and succession planning is edging its way onto the agenda.

This dilemma forces you to confront the reality that your life’s work is probably unlikely to be of interest to another external buyer or investor.

You wrestle with the uncertain prospects of retiring, contemplate family and friends who have succumbed, wonder how you could fill your time, and even question how much money you might want or need after your working days end.

The uncertainty of predicting your mortality and spending needs conspires against you, and you inevitably cogitate whether if you do retire you might outlive your wealth, or if you do not retire there is a risk you might regret the life you missed because you were always working.

Lifestyle, medical advancements, modern healthcare and personal luck all contribute to longevity, while financial planning may also feature in timing your decision to trigger an action plan.

Light at the end of the tunnel

Faced with the positives of a sound business and reliable management team, there is light at the end of the exit tunnel.

For some owner-managers with little prospect of selling their business to financial or trade buyers, the vendor-assisted management buy-out is a viable option.

It enables owners to set valuation criteria within market-facing parameters, empower management and divest a substantial proportion of your stakeholding tax effectively while redefining your role and day-to-day involvement if appropriate.

Even third-party finance is attainable for a carefully structured transaction which is seamless to stakeholders and where existing funders should be comfortable advancing monies for a straightforward transition and retaining the valued account.

Embracing this self-determined, phased exit strategy realigns work-life balance while still preserving a real interest in the future of your precious life’s work.

This seems like getting two bites of the cherry. It is!

Frank Holmes is a founder partner of Gambit Corporate Finance, a leading advisory firm specialising in mergers and acquisitions and fund raising in the UK and overseas, with offices in Cardiff and London.

To view the Wales Online article click here

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