Getting down to business: Exit strategy with Simon Chapman
Deloitte Private partner, Simon Chapman, helps business owners realise the value of their hard work. Simon assesses his clients' capital needs and long-term business ownership options. He has extensive experience in capital raisings and business sales and provides expert advice on business valuation and value-maximising strategies.
Hi Simon, when should a business owner first start thinking about their exit strategy?
Generally, I’d say at a minimum 12-18 months before an exit event, but the truth is it’s never too early for a business to start thinking about their exit strategy. The key is being prepared so that when you do decide to exit you minimise the disruption to your business. Business owners should be thinking about their exit strategy annually as part of their strategic planning exercises.
Thinking about being prepared for an exit event, what steps should a business owner be taking now to be ready?
There really is no 'one size fits all' approach. Factors influencing an exit event include the business, its sector and its stage in the business life cycle. Some common steps we would suggest include:
- Ensuring your back-of-office is tidy and in order. This means, for example, that contracts are current and signed, business processes are well documented, and records are maintained
- Having a clear strategic direction for the business which is supported by a financial forecast and measurable initiatives, and
- Preparing and reporting against budget including meaningful commentary.
In your opinion, where do a lot of businesses go wrong in the process?
An exit event poorly planned and managed has the makings to go wrong in a lot of places.
Too often we see business owners who underestimate at the outset the physical and mental toll a transaction will take on them, especially while they continue to run their business day-to-day. Clients often reflect after a process that going through a transaction is like having a second full-time job, keeping in mind a transaction can take 6-9+ months - a lot for any person to manage.
So, an exit event sounds time consuming on an owner who also has a business to run, how do you suggest owners manage this juggling act?
At the outset of any process we run, we always assess what support an owner has for the day-to-day running of the business and the support available them during the transaction. So much stress can be relieved from an owner when they have capable management personnel in the business or a trusted staff member they can share the transaction work load with. Oh and of course, get an experienced professional advisor early on!
05 July, 2018 by Alice Potter,
Alice Potter works in the Deloitte clients and marketing team and closely with Deloitte Private.