8 Must-haves Before Planning Your Company Exit

Building and scaling a successful business can be both exciting and challenging. However, as a business leader, there may come a point when you're considering changing leadership, selling your company , scaling operations and profits, or just taking a step back to pursue new endeavors.

A successful business exit requires thorough financial planning and strategic decision-making.

However, before thinking of exiting your business, there are several factors to consider to make sure your business is ripe and you get great value for your business.

Our financial solution has helped small and medium-sized businesses raise over $165 million to date.

1. Understand what your business is worth

Start your exit process with a clear understanding of the actual value of your company. Consult professionals who can provide a thorough business appraisal, taking into account your business growth potential, market conditions, and financial indicators.

To make informed decisions and draw in the right kind of buyers or investors requires a reasonable valuation.

2. Start early

Planning an exit from your business is key to maximizing your return. But with so many approaches, it can feel overwhelming and confusing.

Here are some approaches you can take for a smooth transition:

• Sell your share: This could be to another company or investors.
• Family handover: Pass the reins to a family member if you wish.
• Employee buyout: Let your team take ownership, keeping talent and experience.
• Go public (IPO): Raise capital by selling shares on the stock market.

The key is to pick the strategy that fits your goals, be it financial security or family legacy. Plan ahead, create a succession plan, and ensure a successful handover. ?

3. Evaluate tax implications

Tax is a major factor in whether your exit plan succeeds or tanks right out of the gate. Don't let it take you by surprise. Tax implications can vary depending on your exit strategy. Working with a tax advisor helps you:

• Choose the most tax-friendly exit option.
• Manage potential tax liabilities — By understanding your tax obligations upfront, you avoid any unexpected tax bills down the road.

4. Optimise your business

First impression is everything. Just like putting a house on the market, to attract potential buyers or investors, your business must be healthy and efficient.

Here's how to get your business ready for a successful exit:

• Boost performance: Focus on growing your revenue and profitability. Strong financials make your business more attractive.
• Strengthen financials: Clean up your books and ensure a steady cash flow. This demonstrates financial stability to potential buyers.
• Improve efficiency: Streamline your operations to minimize waste and maximize productivity. A well-oiled machine is more valuable.?

The Scalable CFO helps you clean up your accounts, ensuring your business is attractive to buyers and Investor-ready

5. Find your Ideal buyer or successor

Finding the perfect fit cannot be overstated. They either make or break your business.

The right buyer or successor ensures a smooth handover, maintains your legacy, and rewards you and your team.

Here's how to find your ideal match:

• Seek expert guidance: Professional advisors can identify potential buyers or successors who share your vision and values.
• Align goals: Choose someone who understands your business and wants to see it thrive.
• Value creation: The best kind of buyer or successor is one with a history of creating value and thriving under similar circumstances.

6. Negotiate wisely

Set clear goals upfront, whether it's maximizing your take-home price or securing the best deal terms. Consider your priorities and what matters most to you.

Pro tip: A skilled negotiator can champion your interests and ensure you get the best outcome. Consider consulting one.

7. Invest in financial planning

Planning early is crucial. Think about your financial goals (early retirement, funding a new venture?), personal dreams (travel the world?), and potential investments.

Here's how to set yourself up for success:

• Get expert advice: Wealth advisors can help you create a financial plan—turning your exit into a springboard for the next chapter of your life.
• Plan for your future: Align your exit strategy with your financial goals and personal aspirations.
• Explore new possibilities: Consider investment opportunities that'll sustain you well into the future.

By planning ahead, you gift yourself a smooth exit and lock in a lucrative new beginning.

8. Address employee and stakeholder concerns

In selling your business, confidentiality is important, but so is keeping your team informed. Communicate openly with key employees and stakeholders when possible. Address their concerns and explain how the transition will work.

This builds trust and ensures a smooth transition for everyone.

Scaling or exiting your business is a big decision. It marks a new chapter in your entrepreneurial journey. We get it. That's why at TSC, we are passionate about ensuring your financials are rock solid and can stand the hurdles of expanding or selling your business.

Oreabetse Matlhare , CEO, of The Scalable CFO said:

“Navigating a business exit requires complex reverse engineering. The right financial foundation can be the difference between a fair price and disappointment”

Want more clarity and Insights into your financials? Or perhaps an accounts clean-up?

Click here to find out how The Scalable CFO can help you scale or get investor-ready.