Exit Strategy

For whatever reason, the time may come when you need to change, getting out of your business, at a time of your choosing and with the best deal possible.   If you already have an exit strategy, you should already have some idea of the real value of your business.

When you have made the decision to sell you will need to define your assets.

If someone bought your business, what would they really be getting? There may be an inventory of machinery, a list of employees and a certificate for the premises but these are only a small part of what your business is actually worth.  Consider what you've established over time and how to define it.  An honest assessment of your business' assets will attract potential buyers and be financially rewarding for you.

• You've built up a reputation which is now intrinsically linked with the name of the business

• You have a phone number, fax-number e-mail address, maybe even a website which are already known by your customers

• There's the goodwill of your customers, who are loyal to the business because they appreciate the standard of your service

• Trade links are already in place, involving contracts with warehouses and suppliers, for example, with their consequent goodwill

Whoever buys your business will profit from it being unique and ready-made, a substantial advantage that ought to be value-added.

Whether buying or selling a business, the valuation process can be both revealing and rewarding. But it is also complex. So here are some reasons to go through the process of valuation:

• A valuation can expose the best time to buy or sell according to market fluctuations

• An honest opinion of the business' worth means both parties involved in the sale will be more willing to complete the transaction quickly and simply

• A valuation can help the seller agree a fair price for shares - a price that will satisfy the buyer

• Announcing that a valuation is to take place will encourage the management team to tighten up its act and get the business into shape

There are many ways to assess a business' worth, so make sure that the valuation technique you use plays to your individual business' strengths. The valuation approaches include:

• Asset valuations

• Price/earnings ratios

• Entry cost valuations

• Discounted cash valuations

• Industry rules of thumb

Contact your local ICFBA Accredited Partner for more details.

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