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When is the Right Time to Exit a Business?
Investors often decide to exit a business investment because their decision has proved valid, they’ve made a good return – and they decide it’s the right time to sell. Alternatively, they may feel that the business landscape has changed so that the original investment case is no longer sound. Many investors have a pre-planned exit strategy of some form – particularly for more speculative investments.
The same principles apply to one’s own business. You may decide that your hard work has paid off and it’s time to enjoy the fruits of your labours, or to move on to something else. Alternatively, perhaps the company is no longer profitable due to shifts in the market of some kind and you can see no way of putting things back on a sound footing. Sadly, in today’s economic environment, the latter scenario is the harsh reality for many companies.
Then again, you may have purely personal reasons for calling it a day. The exact timing can be a combination of personal and professional factors; exiting a business can simply be the most sensible decision to take for a whole host of reasons.
If that’s the decision you have taken, it’s essential to seek expert advice as there are many things to consider – even for the smallest business (though generally, the larger your company is, the more complex things are). Remember - it’s just as important to plan a business exit strategy as it is to start up a company in the first place.
Ultimately, the main aim is to maximise the value of your company before converting it to cash (or simply winding it up if necessary) and to minimise the amount of time consumed. A good accountant combined with expert financial advice will help you immeasurably with the process.