Entrepreneurs' Exit Planning is Poor

Almost half of the UK’s entrepreneurs are not preparing fully for their exit from the business, according to a new survey. 

Business advisory firm, Deloitte, carried out the research for its Entrepreneurship UK: 2008 report, and despite 72 per cent of founders still being involved in the day to day running of their firm, 39 per cent have no exit-plan in place and 35 per cent were merely waiting for an opportunistic approach from a third party to present itself. 

David Baybut, Managing Partner of Commercial Property at North West law firm Stephensons Solicitors LLP, said: “Sellers who fail to prepare could be setting themselves up at a disadvantage, potentially leaving the door open to delays and additional costs. Sometimes this results in the deal falling through altogether – a very frustrating outcome indeed. 

“If sellers do not adequately plan their departure, and during a sale present documents which are out of date or contain defects, this could give the purchaser an excuse to negotiate a reduced price and could even make them question all aspects of the business they are buying. If key documents are missing or defective, they may ask: ‘what else is wrong and is being hidden?’

“Those planning their exit strategy should bring legal and financial advisers on board before the purchaser becomes involved, to identify and deal with potential problems, leaving no excuses for delays, re-negotiations or even withdrawals from the sale.”

Stephensons has developed a new package for owner-managed firms thinking about disposing of their business. Called Pre-Sale Audit, the service will iron out hazards which could scupper a deal, before the transaction gets underway.