There are various options open to a company owner wishing to exit a business: a trade sale, floating the business on AIM or other market, getting someone else to take over the running of the company or simply deciding to close the firm. Each has tax implications, some will take longer than others, and some will require specific skills. This guide sums up these four options.
This can be selling to senior management, to another business or to employees. If anyone is going to buy the company, you will need to prove the future growth potential through strong sales figures or a solid client base. Owning intellectual property is attractive to buyers, so too if you make or do something particularly innovative. Having a strong management team and good systems in place will also be attractive. There are companies, websites and publications that specialise in the buying and selling of businesses.
This can be a senior manager taking over or a family member, a son or daughter. The successful transition of a business requires planning. Clients need to be kept informed. The successor needs to have the relevant skills and abilities. Talking to non-executives or a trusted business advisor is sensible. Also bear in mind tax implications and liabilities on assets, particularly if passing on the business to children.
While floating a business on AIM means a lot of late nights and hard work, it will make the company potentially more attractive to buyers. Of course a float probably will stipulate that you remain in position, but it may also have the effect of bringing others in over time, and therefore reducing your day-to-day involvement. Again, a strong team is required for a business to float, plus adequate systems need to be in place.
It may be that you've run the business, had your fun and simply feel like shutting the business down. And why not? There's no rule that says you need to float or get an errant son to take over. There may not be a successor, it may not be a business suitable for sale because it's all about you and your experience. Again, objective advice is probably wise.
To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website Builder, Business Plans, Accounting Software, Legal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.