Business Exit Strategy | LR

According to a recent UBS investor report, 48% of business owners have no formal exit strategy or end plan. We hear from a lot of business owners that their long-term goal is selling their carefully constructed business or handing over the reins to a successor, in which case you will need the best professional advice and a financial strategy laid as early as you possibly can.

Naturally, you will want to maximise the sale value of your company which is where accurate business reporting plays an important role not only for you, but for any buyer or major investor – after all, many investors themselves hope to ultimately see the company they are investing in bought out. It’s important to not jump at the first offer of a buyout or acquisition but to shrewdly negotiate from beginning to end in order to maximise your gain and leave all parties satisfied. You should also consider staying on in a managerial role for some time and negotiating an additional sum based on profits made over that period. Consideration and advice regarding Capital Gains Tax (CGT) plays a very important role in this situation when such a large disposal is involved. and it’s important to avoid the tax traps.

Alternatively, some business owners prefer to simply wind their company up and have a clean break, in which case any creditors are paid from disposing of the company’s assets and the remainder is split amongst the shareholders. We can advise you to ensure your business is wound up in the most tax-efficient way possible.

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I'm not planning on selling or leaving my business. Do I still need an exit strategy?

The idea of laying out an exit plan is not just to benefit you, but to seamlessly hand over to a successor for them to start a new chapter with your business. You should leave your business in the best possible shape, so much so that a stranger could come in run it. Process and “how to” guides should be written up and tested, your books should be in perfect condition, and it should be operating at peak profitability.

When is a good time to exit my business?

The best time to sell is usually when business is going well; rising sales, profits and a good confident forecast for the future. The time to sell is when you love the business, but you don’t have to sell! You are in a position of strength.

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LR Connections provides expert independent financial advice, accountancy and estate planning services