Page 6 - Wealth of Experience - Selling a Business 2019

WHAT’S YOUR

ENDGAME?

The day to day running of a business can Commonly, business owners state that they have no exit Only 16% of our respondents started planning their exit
often take precedence over matters such plan because they ‘don’t know how to begin’. Why would strategy more than 3 years before the sale². A study by
as planning for a potential sale. Although they? It’s not something most have done before. This the Wilmington Trust found that 78% of owners agreed
illustrates a potential lack of knowledge around the exit
most business owners know they will process. Overall, our research suggests that the majority that they didn’t have an exit plan because they enjoyed
sell at some point, it’s difficult to know of business owners don’t consider a formal plan until running the business too much. 42% of the group also
said they were too busy to come up with one³. The British
when. selling becomes something they’re certain about. Although government’s Small Business Survey 2016, found that only
As a business grows, it’s a good idea to keep in mind that it’s often the endgame, some don’t consider the legwork 8% of small and medium enterprises (SMEs) planned to
it might be up for sale one day - even if that day never involved in the sale process itself, until selling the business sell within the next 5 years⁴ suggesting that the majority
comes there is no harm in having a business that is in ship is on the cards. of owners are in it for the long run. Even if this is the case,
shape for the future. It means there’s less chance of any committing to a steady trajectory towards exit is a critical
‘skeletons in the closet’ emerging during the eventual due factor in realising the maximum value from a business.
diligence process.
At this stage it’s important to note that thinking too early
about getting out of a business can cause owners to set
the wrong priorities. We’ve seen cases where the business
When did you start planning your exit strategy? owners were so focussed on selling, they ignored some of
the fundamentals required to sustain a profitable business
and that’s never good. Ironically, such fundamentals are
what knowledgeable buyers look for.

Sustained profitability, delivered by
31% 52% 15% a robust and very capable business
is very attractive to buyers.

6 to 18 18 months to 3 3 or more
months before sale years before sale years before sale

1 Cooper Parry Wealth of Experience Survey Q7
2 Cooper Parry Wealth of Experience Survey Q5
3 https://www.wilmingtontrust.com/repositories/wtc_ sitecontent/PDF/Have-You- Created-a-Transition-Plan-for- Your-Business-Future.pdf
06 4 The British Government ‘Small Business Survey 2016: businesses with employees’