Time or money – what matters most?

Deciding when to exit a business is often a question of balancing conflicting drivers; spending time in the business building its exit value versus exiting now for a lesser sum but having the time (and potentially health) to enjoy it.

So how do you decide from a purely financial perspective on the right time to exit?

A foundation principal of our approach is evidence-based decision making.  We believe that as far as possible you should make decisions from an informed, educated perspective based on evidence and facts rather than conjecture, guess work or what someone in the pub or golf club of choice thinks.  That’s not to say that gut feeling and intuition don’t have a value, many entrepreneurs started their business based on a hunch that there was an opportunity in the market, but those hunches are usually formed on a foundation of factual evidence, experience and knowledge.

What evidence is relevant when deciding when to exit? 

Establishing and understanding your drivers in wanting to exit your business is critical along with the timescales you are hoping to work to. Start with the end in mind and work backwards.  An essential element of this process is to evaluate where you are now. This should be from gaining an understanding of where your business is in the business life-cycle and the likely costs, returns and impact on exit value from developing further growth opportunities – and the time it will realistically take to do so.

You need to work out what you require financially and whether that must be a lump sum. Your personal tax liabilities and estate planning circumstances should be reviewed, and advice taken on the potential impact of options available to you.

Again, from a fact-based evidence perspective, all assets (pensions, savings, trust funds, property and investments) that may form part of your retirement planning should be quantified and reviewed by relevant professional advisors.

Finally, if you have never had a valuation of your business, now would be a good time to.

We recently worked with a married couple that owned a successful and prosperous business. They were unsure of their Exit Strategy and how to achieve the growth they desired prior to this, however, they were very clear on the timescales they wanted to work towards. Understanding their current circumstances and getting to the root of what they wanted and by when has been life changing for them. It has enabled them to shape their business strategy in an entirely different way.  They now have full visibility of their financial situation and have been able to bring forward their desired exit.

Of course, selling may not be the only or even the best option for you – it all depends on your personal circumstances and drivers.  Retaining ownership (in part or whole) and stepping back may be a better option.

If anything in this article resonates with you and you’d like a confidential chat about your exit, please click here.

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