Are you ready to exit your business?

Leaving a company behind is never easy.

Whether you have been planning your exit for a while, or you’re keen to opt out due to unforeseen circumstances, quitting a business that you have worked so hard to build can be daunting – not to mention fraught with logistical and emotional challenges.

Here, we discuss some of the reasons why you may wish to change or leave your current role, and which exit strategy may make the most sense, given your current circumstances and your future goals.

The tell-tale signs it’s time to move on

If you developed a clear exit plan at the very start of your venture, then you will know what you want to achieve from relinquishing control of your organisation. It’s just a matter of timing from here on in.

If you did not – or you are not at this stage in your entrepreneurial career just yet – it may be tricky to determine whether now really is the right time to move on, or whether you should spend more time and money trying to recover whatever is lacking in your current setup.

In our experience, there are five main factors that will contribute to your decision to leave your business.

1. Your circumstances have changed

Starting and running a business requires grit, determination, and total commitment to the cause. Entrepreneurs don’t stick to set hours, nor do they ever truly ‘switch off’ from their responsibilities – and this way of living and working isn’t for everybody.

It’s likely that your personal circumstances have changed considerably since you first incorporated your company. Perhaps you have realised that you need to commit more time to raising your young family, or you need to make provisions for caring for your elderly parents. Maybe you need the security of a permanent role elsewhere to ensure you can provide for your loved ones or achieve your own aspirations and objectives. Either way, if owning or managing your own business is not supporting the kind of lifestyle you want, it could be time to let go.

2. You have reached retirement age

You have worked very hard for many years, and now it’s time to enjoy the fruits of your labour by raising the funds you need to enjoy the rich, comfortable retirement you deserve.

You may be retiring by choice, or you could be retiring due to ill health or other unforeseen factors. Either way, it could be time to pass the baton to somebody else within the business, or an external partner or investor.

3. You are a serial entrepreneur

Many people become excited by the initial prospect of building a business but are not as keen to manage it in the longer term. If this sounds like you, and you recognise that your passion for one particular company is waning, there’s nothing wrong with wanting to move on to your next project (and make a good profit in doing so). You just need to make sure you sell up and move on at the right point in the company’s growth trajectory.

4. You need to cut your losses

As a business owner, you can expect to go through financial highs and lows. You may even need to seek outside investment to keep on top of your cash flow. But if you have lost more than you have gained from your venture, or your business is facing bankruptcy, you may have no choice but to exit now and recover what you can.

5. It’s the best thing for the business

You’ve done everything you can do for the company, and you believe that it should now be down to somebody else to take it in a new direction; someone who has the right skills and experience, and perhaps additional capital to take the business to its fullest potential.

Many entrepreneurs find it difficult to believe that they themselves are limiting their business’ success – especially if they are emotionally invested in the organisation and everything it stands for. But sometimes, stepping aside is the most logical and sensible thing to do. Do not be afraid to reduce or eliminate your involvement if you feel it’s time for another entrepreneur or investor to take to the reins, and if you can be financially secure enough to do so.

How do you know if exiting your business is the right decision?

If you find yourself relating to any of the scenarios listed above, it could be time to explore the prospect of selling your company (or, at the very least, reducing the amount of time and energy you must put into the business on a day-to-day basis).

It’s important to consider the financial impact of quitting at this point in your business’ journey. Ideally, you want to part ways with your company when it’s trading well, and when you’re set to make a substantial profit from the sale.

And if you’re not quite ready to leave your company for good, there are other options. Instead of exiting your business completely, you could seek to reduce your stake by selling some of your shares to your partners or external investors. If you’re thinking of jumping ship because you feel your investment has gone a little stale, you could explore mergers and acquisitions that may give the venture a new lease of life (and reignite your passion for it once again).

The key thing to remember is, you do not need to come to such an important decision on your own. The financial consultants here at Dartcell have helped countless entrepreneurs at deciding moments in their business journeys.

Our role is to help you find clarity by exploring the various routes to exit that might be available to you. We will then maximise the value you can obtain from your venture (or ventures) by ensuring you receive the best possible remuneration for your stake and using our knowledge of tax and capital gains laws to keep your liabilities to a minimum.

How to navigate your exit

If you are completely sure that you wish to exit, the first thing you need to do is get the business – or your shares in it – valued. Our consultants are seasoned business valuation specialists who will examine your financials in detail before coming to a view.

You will need to assess the state of the market you are in. Is it trending? Is it in a growth period? Is demand for your kind of business outstripping demand? The broader economy may have a part to play in your company’s valuation, too. High interest rates, lacklustre property markets, political crises, and fiscal instability will all play their part in the saleability and profitability of your business.

Next, you’ll need to decide which exit strategy you wish to pursue. From merger and acquisition (M&A) deals and management buyouts to taking the business to the public via an initial public offering (IPO), there are plenty of ways you can transition out of your company. Our financial team can explain the various benefits of each exit method, along with the implications each may have.

You must make sure you ask any prospective buyers to sign a confidentiality agreement. It’s the only way to ensure no sensitive details relating to your business and its staff, customers and assets are released into the wider market.

Your sale will not go through straightaway. Most sales and transfers can take up to a year to be finalised, if not longer.

For advice on developing your own exit strategy, or for help deciding whether it truly is the right way forward for you and your business, contact Dartcell today.