Exit planning

Structuring your business exit

Whether you are seeking a full sale or looking to retain a stake in the business to benefit from its future growth, having a clear strategy from the outset is key. This will have a significant influence on the exit value you can achieve, as well as the types of buyers and/or investors you are targeting.

Our Corporate and M&A team can explore the options with you, which may include:

• A share or asset sale to either a trade or private equity buyer
• A growth capital investment
• A management buy-out or buy-in
• A sale to an employee ownership trust
• An initial public offering

Financial advice and planning can help you identify what price you need from the exit to do what you want in future, both for you and your family.

Tax and wealth structuring

Securing a tax efficient exit, and potentially making provision for current and future family, can be key considerations. UK tax has become increasingly complex, so early planning here is also key. 

We can help you consider your options to ensure your financial goals are met with precision and confidence, including:

• Inheritance tax and capital gains tax planning
• Appropriate structuring to manage your assets and related tax

We can also help you think about your family wealth and how you can develop an investment or philanthropic strategy, which will be important as this event can transform your life.

Identify and resolve issues early

Avoiding giving a buyer or investor any nasty surprises during its due diligence allows you to retain control of the process and remain on the front foot throughout. Any unexpected issue will give the buyer leverage to renegotiate the price which it has offered, make it consider withholding some exit proceeds on completion, make the contractual terms of the deal far more onerous/stringent or, worse still, lead to the buyer walking away from the deal.

You should not underestimate the negative impact of any material issue arising during due diligence or disclosure on the balance of power in the deal negotiations. Trust between the parties is key. Unexpected issues can affect both deal certainty and timetable, as well as lead to additional external cost and management time.

Legal mini-audit

One way to reduce the likelihood of surprises is to consider undertaking a mini-audit. The aim is to try to identify and address any problem areas by viewing the business from a buyer’s/investor’s perspective, and asking “what is the buyer or investor paying value for?”

Being able to give the buyer all the relevant information upfront will give confidence that it is buying a well-run and governed business and set the right tone for the transaction discussions from the start. It will also help you to maximise value by presenting a high-quality target. Certain issues regularly cause deal friction – if you can identify and resolve these before the exit process starts, this will make for a smoother journey and preserve deal value.

Wills and LPAs

In case something unexpected should happen, Wills and Lasting Powers of Attorney should be in place and up to date to deal with death or incapacity. 

We recognise that your wishes are personal, so we can work with you to ensure your wealth is protected and passes as intended to support future generations.

Defining the transaction perimeter

It is important to ensure that the business owns, or has the right to use, all relevant assets before any process begins. Any pre-sale reorganisation should be implemented well ahead of any exit process commencing. This may include simplifying the corporate structure or, where only part of a business is being sold, carrying out a reorganisation to package up the target in a clean stand-alone subsidiary.

Management succession planning

Ensuring there is a clear management succession plan will enable you to step away from the business and secure the clean exit you may desire. Without the next generation of management in place, it will be difficult for any seller to exit fully without an earn-out or an ongoing role under new ownership.

Incentivising employees

As part of your management succession planning or to incentivise and reward those employees who are contributing to the growth of your business, you may consider implementing an employee reward structure. As the remuneration and reward regulatory landscape is complex and constantly evolving, we can work with you to design, implement and manage tailored employee reward structures, which align with your business goals and comply with regulatory requirements.