Exiting a business isn’t easy, and for lots of business owners that exit may not happen the way they’d planned.
Whether that’s down to market conditions, a change in stance by the board or a complete change of heart from the business owner themselves, there’s lots that can affect exit plans and exit points.
We asked Lucy Hackshaw, founder of Seen Displays, for her top tips on exiting a business. Lucy left her company after growing it from a start-up into a 20-person design studio working with some of the UK’s biggest brands, including Nike, John Lewis and Selfridges.
My timeline to exit
Around 12 months
Six months focusing on the transition, exit and what I wanted to do next
I spent the last three months working the rest of my six-month notice period
1. Start with why
Focus on why you want to exit and why now. It’s an uncomfortable process so staying close to why you’re exiting is vital.
2. Build an exit team before you trigger anything
An exit team can provide valuable support. Appreciate that it’s a complex process and identify what kind of help you need.
During my exit, I used an accountant for valuation, a corporate adviser for strategic support, a business coach and a lawyer.
Lucy Hackshaw’s exit team and their roles
Support in the business’ valuation
Strategic support for the negotiation process
Sounding board for exit and transition planning
3. Develop your successor
Even before you trigger your exit, develop your successor and expose them to your role. This will help them feel confident about stepping up, and let you demonstrate to your buyer that you aren’t irreplaceable.
4. Have a sale price in mind
Know what your walk-away number is and be realistic. I didn’t get what I wanted and had to take my ‘good’ rather than my ‘better’ or ‘best’ sale price.
5. Commit to your plan
Design several exit strategies, pick one and commit to it. This provides clarity when you’re going through a complex process.
6. Be prepared for emotional challenges and changes in relationships
You’ll be negotiating with former colleagues and board members, which can be difficult. As a founder, it is — and will feel — personal but it’s important to remember your shareholders’ position is a business one.
7. Be conscious of your attachment to the business
Founders often put so much of themselves into their businesses. While this can be great for organic growth, it can make separating problematic for both you personally, and for the company.
Explore the detachment process with a coach.
8. Prepare for number negotiations
This is obviously a big part of the process. As a way to ready yourself for negotiations, imagine what your shareholders will say.
Lean on your exit team — and particularly your accountant — for support, and think about taking them with you when you negotiate the sale.
9. Be discreet
If other people within the business know you’re considering an exit, it could cause concern. The more people who know, the greater the risk of the news being leaked to clients.
As such a situation could harm your focus, the company’s reputation and ultimately your negotiation position, it pays to be discreet.
10. Plan for your transition
Consider upskilling while you’re exiting. Directing your curiosity with learning helps you to keep an open, responsive mind, which you’ll need during such an uncertain time.
11. Reward yourself
When you strike the deal, give yourself a gift as a reminder of the journey you’ve travelled, from founding the business to exiting it.
Former colleagues, employees and clients are your work community, and may be quite close friends. You don’t have to disconnect for long. After a conscious break I started meeting back up with previous colleagues and clients just two months later.