Exit Strategies for Business Owners:
Planning Your Successful Departure
When is the best time to start thinking about your business exit strategy? To be honest, it should be before you even start your business. Before you start your business and invoice your first client or customer, you should be thinking about what you would like to achieve with your business and where you would like it to go.
But let’s say you’re now several years into running your business and you haven’t even thought about your exit strategy…that’s okay because the second best time to start thinking about your business exit strategy, is today (cue that Chinese Proverb about planting trees…).
We have been working with a number of clients over the past few years to successfully exit their business. “Successfully exiting a business” can mean different things to different people, but generally includes:
* Selling for an acceptable price
* Minimising the resulting tax liability on the sale
* Minimising the disruption to the business during the due diligence and negotiation stages, and then the actual changeover
* Getting the right advice on how to best utilise the net sales proceeds.
No business exit is the same as another. Some of the recent sales we have assisted with involved very different purchasers, we have had:
* A sale to a ASX listed company
* A sale to a private equity group
* A sale to an employee
* A sale to an overseas buyer.
One commonality with each of these sales, however, is that each involved technical legal and accounting advice and involvement to ensure each party was adequately protected and achieved the best outcome.
Your business exit strategy is something that you should think about at least on an annual basis. We generally have this conversation with each client around tax planning time. If you haven’t previously done so, spend some time this week thinking about your exit strategy from your business, specifically:
1) What is your exit strategy? Is it sale to a third party? Is it a sale to employees? Will your children take over the business?
2) What is your timeframe for exit?
3) Is your business in the best shape to achieve your exit strategy goals?
We recommend that business exit plans start at least 5 years before your proposed exit. This will give us enough time to help you get your business “sale ready” and ensure it is appropriately structured for the exit you want.
Feel free to book in a time with us to discuss.
DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.
Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or lifting weights in her local CrossFit gym. Book in to see Jeanette today.