5 key reasons for planning your exit

1 August 2022

If you haven’t thought about your business exit, then you should read our blog ‘Planning for exit.

Below we continue the theme. Here are 5 key reasons to always consider your desired exit when developing your business strategy and plan;

1. It defines how you guide your company’s growth

If you are not absolutely clear as to what you want as a final destination in your planning, then you’ll never know if you’re on the right route. Defining your exit strategy gives you a clear vision for your strategy and the ability to articulate it to others. It also gives you your vision for life beyond the business and what you need to achieve to get there.

It crystalises the destination and therefore the route to it. That may need to change due to circumstance but if you keep your eyes on the target then you can continually shift direction and keep on track.

2. You will have clarity regarding when the exit should happen

This allows you to determine an ultimate timeline whether that be 1 year or 10 years. That allows you to concentrate on preparing your business to be ready. As mentioned in 1 above if circumstances change your clear vision allows you to update your exit plan and make strategic decisions which enhance your company’s allure and value.

The process requires preparing a databank of detailed paperwork. Having clarity on when exit will happen means you can plan your databank well in advance and get the appropriate professional support. Don’t underestimate the time or complexity of this operation. Poorly organised databanks will delay or, at worst, prevent your sought-after deal happening at all.

3. You will understand the value of your company and its worth to the marketplace

In our experience company owners always overestimate the worth of their business.

Determining this accurately is essential. You need financials spanning three to five years and clearly understand market conditions currently and how they will change over your exit period.  You will need to understand who the potential buyers / merger targets / acquisition targets / MBO players are and prepare accordingly

All of this will allow you to understand if your growth plans are sufficient to be attractive to the market and what you need to do to adjust them if necessary to enhance the value of your business.

4. Accordingly, your business will become more appealing to buyers or other targets

Creating an exit strategy illustrates that you have a clear vision for your business and that clarity of vision enhances your appeal to prospective interested parties. 

It also illustrates your commitment to the end deal. Interested buyers or merger / acquisition targets will want commitment as that engenders trust, the basis for all successful agreements.

5. You’ll be ready

You are in control and will be able to take advantage of market conditions. Timing is crucial. If you haven’t prepared in advance, then the work required will be rushed and may well miss the opportunity.

Following on from 5 above, for any business leader the essence of a successful business is having true control. Understanding your market, your customer, your competition, your processes, your route to market, your prices etc. etc. Doing all of that but doing it in a way which differentiates you for the better and engenders trust in your brand. No wonder most businesses ‘live in the moment’.

But true control is doing all of that to a plan governed by what you want to be the next stage in your life (as an owner) or lives as a board or shareholders and which allows you to be ready for when market conditions are at their optimum.

That’s a real destination. Not just a stage in a growth plan.