Exiting Your Business
When considering exiting your business, it is important to plan early and have a clear idea of what you want to achieve.
Understanding how you want to exit and the value you want to achieve will be crucial to determining what option may be best for you. It's also important to consider tax and wealth planning alongside this, as any structuring will need to be undertaken in good time before an exit for it to be effective. It’s therefore important to ensure all your advisors are aligned to your plans and working together to help you achieve them.
The method of exit will depend on your goals and circumstances, but could include:
- Full exit to trade or private equity – the consideration received may have a deferred or contingent element, which would need to be worked into your plans.
- Partial exit to trade or private equity – it’s important to consider what your ongoing role may be and for how long.
- Passing to the next generation if it’s a family business – consider who that would be and on what terms.
- A transfer to an Employee Ownership Trust – a tax efficient way of passing some or all the business to its employees.
- Post-exit – establishing a Family Investment Company to preserve wealth in a tax efficient way for your family.
It’s important to get professional advice on how each option may impact you and what steps you should be taken now to maximise the value received. Regardless of which option you’re considering, there are some things that you should be looking at now to get yourself ready for an exit in the future, including:
- Considering the tax implications for an exit, as this will have a strong influence on how you exit
- Ensuring you have taken action in case something happens in the meantime, such as a cross option agreement with life insurance if you have other shareholders
- Making sure your governance paperwork (articles and shareholders agreement) provide clarity on how an exit can or might occur
- Getting all your business documentation in order, whether ownership or day to day, perhaps by creating an online data-room
- Making sure that your business is fully compliant and minimises risk, from employment and customer contracts to intellectual property.
Businesses come in all shapes and sizes. Because of this, it’s always wise to rely on professional advice, tailored to your business and personal situation.
We want you to be confident that the hard work you’ve put in can pay off when it comes to the final decision.
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