Last post: Sep 16, 2021
The ongoing pandemic has for many SME owners been a wakeup call. Bruised by coping with the machinations of Brexit and the consequent need for stockpiling, and the ongoing impact of the pandemic on health and the economy, (re)assessing your own retirement plans may now be feeling timely.
This isn't something the should be done on a whim, however, so here are a few key things to consider:
Exit Strategy
In preparation for offering the business for sale, the owner needs to review who s/he would like to sell the business to - and shape the business accordingly. For example, if it is to staff, is there a management team in place with the funding to buy it?
Succession Planning
This is important not only to help prepare the management team for a management buyout (MBO) or for a strong trade sale offering, but it is essential for capturing the value of the business in the sale price.
Roger Bibby from Avocet Investments said: "We've been selling businesses for 20 years and have recently come across some truly shocking cases of value destruction because of the lack of succession planning.
"For example a 70-year-old owner who has worked 24/7 to build up a very profitable business - he has no management team in place, so the likely value of his business will be 50% under what it should be."
The important lesson is to start preparing for your business exit early and to take advice on the steps you can take to achieve a successful sale in due course.
To help in this process Avocet runs the 1=4 Increased Business Value programme, valuing a business realistically & highlighting how the value can be improved for that successful sale. It then helps the SME Owner with improving this value in a Plan with Milestones.
Author: Roger Bibby of Avocet Investments in Amersham
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