Are you contemplating passing on your business to your children or other family members, or a family trust? Or are you considering selling to your co-owners or to a third party? If so, make sure you put in place an exit strategy to maximise your returns.

Food for thought...

• Your exit strategy should cover the following areas:
• Ensuring that your business structure is tax-effective
• Entering into agreements with your co-principals to facilitate your exit
• Choosing your optimum exit option
• Grooming your business to improve its value through implementation of an operational business plan
• Preparing and implementing a master exit strategy plan
• Integrating your personal financial planning with your business exit planning
• Achieving a successful disposal for the maximum after-tax price.

Even if you are not planning to exit your business in the foreseeable future, you should put in place the foundations for future growth and risk management, namely:

• A tax-effective structure (with regard to capital gains tax, inheritance tax, income tax and corporation tax)
• A business continuity plan (covering, for example, shareholders’ and partnership agreements, employee contracts, keyperson insurance)
• An operational business plan
• Where appropriate, business valuations (or opinion as to value).

Surprisingly, some private business owners overlook this planning completely, despite the fact that most of them are in business to build a capital asset and all of them must leave their business some day. Building capital value as well as earning a living is the difference between being in business and working for somebody else, so it makes good sense to maximise the exit value by long-term planning.