24/02/2025

Planning a business exit strategy can be daunting. When you are working night and day to grow your business and ensure its success, thinking about your exit is probably the last thing on your mind.

As a corporate law partner, I see many business owners who have left it too late to plan an exit from their business without major disruption and who encounter difficulties which could have been avoided. For example, deciding to sell your business as you approach retirement age can have a hugely negative impact in terms of your bargaining position.

Having in place an exit strategy, even if the event is years in the future, is sensible planning. It doesn’t matter if you don’t have any immediate plans to sell; planning for an exit is a smart move if you want to protect and enhance the value of your business and achieve a smooth transition when the time comes.

It sounds obvious, but thriving businesses are easier and quicker to sell as they offer greater potential to buyers and it is not unusual for an approach to be made unexpectedly. It’s worth being ready for such an event so that if you decide to consider a sale in such circumstances you have the best chance of achieving maximum value out of your business.

How to prepare your business for sale

Ensuring your business processes are clear and effective will give potential buyers confidence as they carry out their legal due diligence. Regardless of your exit plans, it is good business sense to ensure all paperwork and processes are up-to-date and efficient, including, among other things:

• documenting internal procedures, for example, in handbooks and other policies;
• ensuring terms and conditions of employment are consistent and up-to-date;
• putting in place clear customer and supplier contracts – written terms and conditions and other agreements;
• keeping HMRC and Companies House filings up-to-date;
• making sure you have an up-to-date statutory book separate from the register at Companies House;
• documenting property arrangements, including leases and break clauses;
• ensuring your management accounts and financial records are up-to-date.

Buyers can use poor record keeping as a reason to drive down an offer, or may require everything is brought up-to-date, which can take time and incur unnecessary costs. Running a well-organised tight ship is good for your business and, when the time comes to make your exit, will help towards making the transaction a smoother experience.

Choosing the right business exit strategy

There is, of course, more than one way to exit a business and it is important to seek advice on the best approach to meet your needs and objectives. Some examples are listed below.

• selling to a new owner – this can be a lengthy process, particularly if the buyer carries out an extensive due diligence exercise, and negotiations can be tense;
• transitioning ownership to a family member, such as a son or daughter – a good option if you want to keep the business in the family and are able to identify the best person to grow the business following your exit;
• merging with another business – this is the merger or acquisition of your business by another business, often with shared goals and culture;
• management buyout – this method, in theory, should be simpler as you are selling your business to people who are familiar and who already have much of the background knowledge and information;
• selling your interest to a fellow shareholder or partner – dealing with a buyer that you know should make the process easier.

Finally, as you plan your exit strategy, it is worth considering whether you want to retain some involvement in the business, perhaps in a managerial or consultancy capacity, so that your expertise is not lost overnight. However, you should bear in mind the transition from boss to employee and give careful consideration as to how and if this would work and the relevant terms if it is a viable consideration.

Need advice on planning your business exit strategy?

Getting expert advice when planning your business exit strategy is strongly recommended. To speak to a member of our corporate law team please email enquiry@beswicks.com or phone our Stoke-on-Trent solicitors on 01782 205000 or our Altrincham solicitors on 0161 929 8494.