Exit Planning 101

How to prepare your clients for exit and why

Many business owners leave exit planning far too late. By the time they want or need to exit their business, there is very little time to get the business ready for sale. This either forces them to sell their business for a lot less than they were hoping, they are forced to close the business down or due to financial reasons, some owners may even be forced to continue working in their business.

What does it mean to be exit ready and why should this be a priority?

This is often referred to as the 7-D’s – Deal, Decide, Distress, Disability/Disease, Disagreement (between business partners), Divorce or Death. It is estimated that around 50% of business owners will be forced to exit their business. That means that half of business owners will have a change in their circumstances. Because none of us know when, where, who or how any of these circumstances could happen, the need to be prepared is critical.

This even applies if the business is one person and their laptop because even at this level, your client and their loved ones will be affected by it. Therefore, prior preparation must take place if you want to help reduce the extra stress as much as possible.

This is where I believe the biggest opportunity lies for accountants to work with their clients and help them prepare and implement an exit strategy. By doing so you will support them in avoiding the many misconceptions and pitfalls when it comes to exit planning that causes deals to collapse.

To help address these issues VFD and Business By Design have partnered to create a 12-week workshop to show how you can help your clients become exit-ready and at the same time increase fee income.

We have brought together a team of experts to guide you through this process and to help make working with your clients as easy as possible.

Each week we will focus on an aspect of exit planning:

Did you know

  • 98% of business owners are not adequately prepared for the Due Diligence phase and this will not only increase the amount of time it will take to complete a deal but will cost considerably more as well.
  • 86% of owners are working hard and creating value in what they deliver to their customers but when it comes time to sell, this value is not always transferable – causing the deal to collapse or the value to plummet.
  • 83% have no written exit plan and even more have no post-exit plan, which is why getting the owner exit-ready is just as important as getting the business ready for sale.
  • 78% have no exit team to help prepare and navigate through the exit process.
  • 70% do not know the income they require to support their lifestyle post exit. They do not know ‘THEIR NUMBER’.
  • On average, business owners’ over-value their businesses by at least 59%.
  • 56% feel they have a good understanding of what their business is worth but only 18% have had any form of third-party valuation carried out on their business.
  • 49% have done no exit planning at all.
  • 40% have no plans in place to cover illness, death, or a forced exit.
  • Only 29% of owners have adequate tax planning. This is a vital part to an owners exit strategy and knowing how to structure their business in the most efficient way possible.
  • Only 40% have any contingency plans for death, illness, injury, or divorce. The main effect of not dealing with what life may through at us is that the owner’s attention will get diverted elsewhere and the business may suffer as a result. It is always worthwhile to plan for the unforeseen, much like an insurance policy. You hope to never use it but it is good to know it is there just in case.

Results from the EPI State of Owner Readiness Survey

  • 1. Introduction to Exit Planning

    90% of businesses are not saleable. 80% sell, and less than 5% of those that do eventually sell achieve their asking price… Learn what it takes to create a saleable business and be exit ready at all times.

    Join us: Thurs 20th January 2022 @ 12.30

  • 2. Business By Design Methodology

    Learn about the Business By Design Value Creation Process that can be applied to any business at any stage of development. Discover the tools required to help both the owner and business prepare for a successful exit.

    Join us: Thurs 27th January 2022 @ 12.30

  • 3. Wealth Planning

    The vast majority of business owners struggle to create enough equity value in their business to live the life they desire – do you know ‘Your Number’ and what you can do to bridge the wealth gap?

    Join us: Thurs 3rd February 2022

  • 4. Personal Exit Preparation (Transitioning Phase)

    Personal preparation is vital to a successful exit and determines the next chapter of your life, be it retirement or moving onto another project. Find out how to prepare yourself for what lies ahead both pre- and post-exit.

    Join us: Thurs 10th February 2022 @ 12.30

  • 5. De-Risking

    SME owners need to understand how to reduce the risk within their businesses as much as possible. De-risking not only protects the wealth the owner has already created but it will help increase the overall value of the business.

    Join us: Thurs 17th February 2022 @ 12.30

  • 6. Growth

    Very few owners know how to harness the full sales potential of their current client list. Learn how to harness this potential and grow your business in the most cost effective and efficient way before pressing that “sales and marketing” button.

    Join us: Thurs 24th February 2022 @ 12.30

  • 7. Funding

    Learn the various funding options available to you to grow your business. Understand what options are accessible to buyers and how this could impact your exit plans.

    Join us: Thurs 3rd March 2022 @ 12.30

  • 8. EVA Due Diligence Report

    Help the owner understand how a potential purchaser would evaluate their business. This tool will help you analyse the performance of the business from an unbiased viewpoint, highlighting the KPIs that will be relevant to prospective purchasers.

    Join us: Thurs 10th March 2022 @ 12.30

  • 9. EVA Valuation Report

    There are a number of methods a potential purchasers will use to value a business. The Valuation Model helps you understand the key methods used for SMEs and will help you produce a valuation range the owner can expect offers to fall within.

    Join us: Thurs 17th March 2022 @ 12.30

  • 10. Preparing Your People Plan

    Your management team and employees are critical to the success of your business and exit strategy. Learn the key fundamentals required to ensure this vital part of your business is in order.

    Join us: Thurs 24th March 2022 @ 12.30

  • 11. Tax Planning

    Learn the importance of tax planning and what you need to do to ensure you are being as tax efficient as possible and keep more of your hard-earned money.

    Join us: Thurs 31st March 2022 @ 12.30

  • 12. Putting it all together

    This session takes a look at how you can support your clients in planning their exit. We will summarise the workshop by exploring the tools you need to provide this service to your clients.

    Join us: Thurs 7th April 2022 @ 12.30

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