Exiting a business isn’t easy and for lots of business owners that exit may not happen in the way they’d planned out.
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 impact on exit plans and exit points.
We asked Lucy Hackshaw, founder of Seen Displays, for her top tips on how she exited a company that she grew from a start-up to a 20-person design studio that worked with some of the biggest brands in the UK, including Nike, John Lewis and Selfridges.
My timeline to exit
Six months focusing on the transition, exit and what I wanted to do next
I spent the last three months working out the remainder 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 vitally important.
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 support you need.
I used an accountant for valuation, a corporate adviser for strategic support, a business coach and a lawyer during my exit.
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 help you demonstrate to your buyer that you are not irreplaceable.
4. Have a number 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. This can be great for organic growth; however, it can make detaching problematic for both you personally, and for the business.
Explore the detachment process with a coach.
8. Prepare for number negotiations
This is obviously a big part of the process. Imagine what the shareholders will say as a way to help you prepare for negotiations.
Lean on your exit team and particularly your accountant for support – think about taking them with you to negotiations.
9. Be discreet
If others within the business know that you’re considering an exit then it could serve to worry them and the more people that know, the greater the risk of the news being leaked to clients.
It’s obvious that this could be detrimental to your focus, the company reputation and ultimately your negotiation position.
10. Plan for your transition
Consider upskilling while you’re exiting. Directing your curiosity with learning helps to keep an open, responsive mind which you’ll need during such an uncertain time.
11. Reward yourself
When you strike the deal, gift yourself something as a reminder of the journey you’ve been on, from founding to exiting the business.
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.