Consider your exit strategy when starting up

Exit option: selling your business

The most common exit option is selling your business - either to another business or your employees or management.

Trade sales

A trade sale occurs when you sell the business (or parts of the business) to another outside party. It can be the best way to get a good price - but you'll need to develop a business that's attractive to potential buyers.

If your business is not already limited, it may be difficult to achieve a trade sale as the value of the business is likely to be heavily tied to your skills or business relationships. The business may also appear less well established and therefore less attractive to potential buyers.

If you did not start out as a limited company, it is worth considering incorporation to give the business its own legal identity. See our guide on how to set up and register a limited company (private or public). Selling on the business' trade, assets or customer list should then be easier.

This may also make a merger possible - although this would probably mean remaining with the business for longer than if you make a straightforward trade sale.

Your chances of a successful trade sale can be improved by drawing up and following a clear exit strategy and minimising the potential hurdles to a successful exit. See the pages in this guide on why you need an exit strategy and decisions that could affect your eventual exit.

Selling your business will also be easier if you can:

• show year-on-year increasing profitability
• create a high-quality product or service
• develop an innovative product or piece of intellectual property
• build a strong customer base
• recruit a high-quality team
• maintain premises and assets in good condition

See our guide on preparing to sell your business.

Buyouts

You could also sell your business to managers or employees - known as a buyout. Buyouts usually occur when employees or managers hear the business is up for sale and would like to extend their stake.

This option may not be as profitable as selling to a trade buyer.

Subjects covered in this guide

• Introduction
• Why you need an exit strategy
• What do you want from your business?
• Decisions that could affect your eventual exit
• Exit option: family succession
• Exit option: selling your business
• Exit option: float your business
• Exit option: close your business
• The exit process
• Here's how I planned an exit strategy

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