May 09

Exit Stage Left: Business Plans & Exit Strategies

All too often in my position I am dealing with well-established businesses that are either looking for Commercial Guidance; whether that be financial or just as a trusted advisor for a business related decision that needs to be made. Part and parcel of this is asking the difficult questions or in some cases trying to ascertain what can be difficult answers.

exit stage leftAfter a recent conversation with a client who had asked for financial assistance we did a deep dive into the business’ financial records which involved asking several probing questions…

* What does 5 years look like?

* What does 10 years look like?

* What is your Exit strategy?

Now reading this and as a business owner you may already have answers to these questions. Experience has shown that many business owners do not. Let’s examine Exit Strategy…

When asking a company director / business owner “What is you Exit Strategy?” the response can often be as simple as, “I am going to sell the business and retire.”

A simple answer in one way; however further discussion will inevitably throw up more questions such as, “Who are going to sell to?”

* Family?

* Other Board Members?

* External / Competitor?

Any of these answers will then throw up even more questions but in the example of my recent Customer the answer to “Who are you going to sell to?” was his son.

This is great news and these stories are not uncommon in the business world. When asked how the son would fund the purchase of the business the owner had no idea. Thoughts turned to selling to a competitor with the hope that his son could continue running the business but if this was not able to be guaranteed then his son would be seriously affected by a buy-out.

On our advice the Customer implemented a series of procedures as part of his newly devised Exit Plan. NWCS advised on the business buying back shares over a five year period. This was done by way of introducing cash into the business and streamlining other areas.

The business is now a lot stronger with a 10 year plan in place. The father will remain in the business as a Director with a reducing shareholding done on a ratchet scheme. The son has already stepped up into the new role as MD of the company and continues to take on more responsibility.

As with all enquiries we receive, each Consultation is tailored to the business’ individual needs. The above example is just one way of helping a business to navigate through what can be a difficult position; particularly if its family owned.

If you would like any further information or a tailored business plan contact one of the advisors at NWCS and book your appointment.


About The Author

Kevan Reid worked as a Relationship/Business Development Manager with major banks for over a decade. He is now a Director for North West Commercial Solutions and is an expert in Commercial Banking, Credit Risk, Invoice Discounting and Portfolio Management.