How to Build an Exit-Ready Business and Maximise Your Valuation
Are you prepared to step away from your business on your terms? In this episode of the Exit Insights Podcast, Darryl Bates-Brownsword and Kevin Harrington explore what it truly means to be “exit ready”—for both your business and yourself.
Why Exit Planning Matters
Many business owners never start their business with the intention of selling it. But whether you’re looking to step back in five years or 15, having an exit plan benefits you right now. An exit-ready business runs better, operates more efficiently, and can entertain offers at any time.
Key Steps to Prepare Your Business for Sale
- Reduce Owner Dependence: A business that can’t run without you can’t sell without you. Strengthen your management team to take on responsibilities you currently handle.
- Systemise Operations: Buyers want stability. Ensure your processes are consistent, documented, and repeatable.
- Clean and Accessible Records: From employee contracts to financial reports, ensure your records are tidy and easy to access to build buyer confidence.
- Diversify Your Customer Base: Avoid over-reliance on any single client or revenue stream—it’s a major red flag for buyers.
Preparing Yourself for the Next Chapter
Exiting your business is about more than just the numbers—it’s also about what comes next. Many business owners struggle with identity loss and lack of purpose post-exit. To avoid this, start planning your post-exit goals now. Whether it’s philanthropy, investing in new ventures, or travelling, make sure you have a vision for your future.
Maximise Your Valuation and Exit on Your Terms
Kevin Harrington put it best: “A business that can’t run without you is a business that can’t be sold without you.” By addressing risks, creating sustainable systems, and understanding your business’s value through a buyer’s lens, you’ll set yourself up for success.
Show Notes:
- Why an exit-ready business benefits you now and in the future.
- How to emotionally and practically prepare yourself for life after the sale.
- What buyers look for: systemisation, growth potential, and clean records.
- Understanding the risks of earn-out agreements and other deal structures.
Whether you’re looking to sell soon or just want to create a stronger, more sustainable business, this episode is packed with actionable insights.
Watch the episode here:.
Welcome to the podcast that’s dedicated to helping you to prepare your business so you can maximise valuation and then get an exit on your terms. This is the Exit Insights podcast presented by Succession Plus. I’m Darryl Bates-Brownsword and I’m joined with my business partner, Kevin Harrington, to explore some of the, let’s call it best practice of exit planning and what does it all mean. Welcome and thanks for joining me today, Kevin.
Hi, Darryl. You talk about best practice, and that’s an interesting one, isn’t it? One day, perhaps we ought to pen down what we think is best practice, because if you pitch that question to 10 professionals in the industry, you do get some subtly different answers, don’t you?
Well, yeah, well, let’s, why don’t we try and unpick a little bit today of what we think some best practices are in exit planning and, and why you want to be exploring exit planning and what the hell does exit planning mean if you’re a business owner, if you’ve, you you, you, you spend all your time building your business and growing it and making sure that it’s viable and, paying your income and looking after all of those employees, families, and all the, all your customers needs year in year out. And now someone says you need to be thinking about exit planning on top of everything else.
So, what does all that mean? Let’s unpick that, shall we?
Yeah, we’ve talked about this a fair chunk in the past, haven’t we? And, you know, if I was asked to sort of pen a paragraph about it, I’d probably say, and I know how you’re going to come back on me on this. So I’m opening the door for you here, Darryl. I’d say that.serve them up and I’ll return the serve.
Yeah, so the match is underway. Exit planning is about preparing your business for a successful transition. However you do it, whether that’s through a sale, handing it over to other people or other means. It’s not just about the end game. The end game is a transaction. And it’s about building a valuable, sustainable business from day one. So that’s my starter. That’s 15 love to me. And it’s over to you.
Cool. Well, I love the word transition, setting yourself up for a transition and preparing for a transition because it doesn’t necessarily mean that you’re going to sell your equity and we can break down and go, and we’ve touched on this before about there’s five or so exits you need to go through and it’s succession and exit and the transition in ownership could be to family members, it could be to a trade sale or it could be to a strategic buyer and there could be new owners come in place, but you stay. So there’s a whole lot of various transitions. So exit planning, what does it mean? Well, let’s explore and unpick. So you talked about the transition and ownership and succession plus our succession planning. The thing that I like to say is. If you’re a business owner, if you own your business and you’ve built it up from scratch and you’re the founder then you’re probably thinking, hey, at some point I want to get an exit on my terms. I want to get the most from my life’s work. So how do I construct that? How do I prepare that? Well, we say you need to make sure that your business is exit ready when you are ready to exit. And you want to be in a position where you can negotiate a deal that’s going to work for you.
So yeah, that’s all nice marketing rhetoric, but that’s what I want to unpick today, Kevin. Let’s go, what does it mean when we say get your business exit ready? What does it mean to say that you’re ready for exit? And what does it mean? What are the gaps that you want to close when we say you got to negotiate or you want to be able to negotiate a deal that works for you or get the numbers that work for you? That’s what we’re really talking about, isn’t it? What is the nitty gritty between those nice marketing headlines?
Yeah, I think just one more thing to put in there for context before we get onto that core agenda is that most of our clients are owner managed businesses. I mean, typically 10 to 100, 150 staff or whatever. And when they open their doors for business, exiting their business was never on their agenda. What they were doing was taking a craft skill or profession, whatever and realising they needed more and more people and they grew the business and they’re probably running quite a lovely business today. Now that differs a great deal from some business or many businesses that are launching themselves in 2025. Startups now, especially if they have external funding, are declaring how they plan to exit before they even start trading. And so we’re talking to this is a message really for those really beautiful owner managed businesses, the backbone of industries in countries, SMEs that have been going around for a couple of decades or more. And you didn’t start your business to exit it, but now you need to. So therefore, what does it mean? And I think it’s important to understand that because there are different schools of thought in tech startups to establish businesses.
I think it is important to, I guess, identify the differences there. So we’re talking about the businesses that we do our best work with, are those, I guess, who are, you might call them traditional businesses, they’ve got people working with them, they may be working as a hybrid model or semi-virtual now, but they’ve got management teams in place, they’ve got a number of people working with them to get a job or deliver a product or a service.
which is subtly different to those tech startups or those digital only businesses, which could be significant in revenues, but have got a whole lot of subscription type digital products where someone could be building a multimillion pound business, multimillion dollar business from the garage or from mom’s bedroom or what have you. And it’s a different type of business, but those businesses are often started up with an exit in mind. And so when they’re going for funding, they have to inform the funders of how they intend to exit the business because the funders want to know how they’re going to get their return on investment. Whereas the traditional business that just grew from scratch, often organic growth or by acquiring a number of competitors as they grew is a slightly different model. And they haven’t really had to answer to anyone except maybe the bank manager over the years or a board if they’ve got to the stage where they’ve established a board.
Yeah, so that’s good. So we’ve established that as a context. And I think here we need to say that exit planning isn’t really just a one-off event, it’s a journey that starts the moment you open your doors. And I think that there are several kind of key changes people need to implement to make an established business exit ready. And the first thing is around this over-dependence on the owner.
So the implementation, the change that’s needed is to strengthen your management team. know, business that can’t run without you is a business that can’t be sold without you. And if I’m going to buy by someone’s business and it’s dependent on that owner, how do I feel about that? Does a business owner want to become an employee? Probably not.
Yeah. likely. So let’s get a definition around the business’s exit ready, shall we? Or some criteria, maybe not a definition. Business is exit ready when? And one of the things you’ve put out there is basically a change of ownership can occur without needing the founders or the original owners ongoing involvement. Yep. Another one is that it’s got a a pattern or we were confident that the revenue pattern will continue without the owners, which is kind of a derivation of the same thing. I think another one we want is some sort of systemisation so that ensures that the business is consistent, repeatable and reliable. It’s going to keep doing the same things. So it’s boring. We sometimes hear about businesses being boring as a good thing because you know, they’re stable.
Yep. I would add a couple more onto that. I would say that an action required, you know, what is required to make that business exit ready is diversing, diversifying the customer base. If there’s an over dependence on one channel or one customer, it’s a red flag for buyers. What if that what if that buyer has a strong personal relationship with the founder or owner of the business, suddenly 20 % of your business can go. So a well-spread customer base is important. And at the same time, most buyers will be looking at a business where they go, yeah, yeah, it has got reporting processes and procedures. It can manage without the owner, all those things. But they also, they’re looking for the opportunity that they can add to the business and they want to have a the opportunity for sustainable growth. And buyers are really looking to pay for potential, not just past performance. So first of all, has to, existing business needs to be sustainable. But what leverages my money is the buyer of a business. If I can add my expertise, my cash, my wherewithal, and get that purchased business to grow even further, that gives me my really good positive return on investment.
Yeah, so we don’t want more than 20 or 30%.
Yeah, and we’re starting to get to the point now where we’re going, there’s a difference between with the business is sellable and a business where you maximise the valuation. Because having it sellable just means I think, know, the really the first stage of total sellability is where the business is an ongoing concern. It’ll continue without the involvement of the owners and then they can get out and transition the ownership. And it’s a good investment for someone else to buy.
Then now on top of that, go, well, actually, what’s the upside? Where can I take the business from here and build on it? What are my opportunities? Can I take this business and introduce it into a new marketplace? Can I take this business and add my product into their marketplace? Can I do both of those things? What are my opportunities for growth and to leverage what I’ve already bought? We talked about, we don’t want an over-reliance on the owners, share, any of the shareholders or any of the staff or any of the suppliers or any of the clients. So we want it nicely balanced out. Now we want to start looking at, and we talked about having it systemised so that it’s reliable and systems tends to means if a business is systemised, that tends to mean that the systems are documented. So it’s not being run from memory which is one of the things that helps make it less reliant on people. Then we want to start exploring things like, you got any IP? Have you got a reputation in the marketplace? Are you known for having a proprietary product or a proprietary process that’s only available from you? Do you have a reputation, a brand in the marketplace that links that IP, that knowledge, that know-how to your businessn rather than to the people in your business. There’s a nice additional piece which makes the business even more attractive for sale. So we’ve already established it’s sellable. Now we’re looking at how we increase the valuation.
Yep. They’re good things. I heard someone say this the other day, so I’m not taking this as my original statement. So it’s an exit ready business is like a house that’s always show ready, you can entertain offers at any time. And I quite like that because people quite often when we chat to them go yeah, but it’s a lot of work getting my business exit ready. I don’t want to exit for five years and so on. But an exit ready business, anyone that turns up and says, have I got a deal for you, I’m going to buy your business, you’re in a position to negotiate it and maximise on that walk up offer. But more important than that, this big side benefit of being exit ready that often gets ignored is that when your business is exit ready, it’s it operating at peak. It’s, it’s not 100 % exact stress on a business is at peak. So it’s 80 to 90 % or whatever. And, those businesses that are operating in a way they do because they’re exit ready with processes, procedures, reporting, good spreader customers, good spreader suppliers, all that stuff, they end up being more fun businesses. And you know what more fun businesses become more attractive to people to buy and even without marketing it, once you start running a good business where people are happy with happy customers, it has this kind of glow to it that attracts people to work there, to buy the business, to be clients of the business, et cetera.
And that’s when you start getting Google reviews and, and glass door type reviews where, where people are raving about the culture of the business and, what a good place it is to work. And, we’ve touched on this in previous podcasts where we talk about the legacy and that’s what people, how people talk about your business when they’re no longer there or when you’re not around. So it’s just building that overall reputation and, in the marketplace of how the business is known and what it’s like to work there and what it’s like to be a client of the business.
Okay, let’s add in there. What else does a business that’s exit ready look like? We’ve touched on a number of things, but I think we just need to add and go, look, it’s also a business that has, can access all of its records really neatly. All its records are neatly and tightly and held. So all of the employee contracts, all of your supplier contracts, all of your customer contracts, everything is documented and easily accessible. You’ve got shareholder agreements everything is accessible. when if there is due diligence and a buyer is interested in going, what am I really buying here? They want, they want evidence. They want to be able to see the evidence and documentation of what it is they’re buying. And if you can put your hands on that and go, here you go, here’s exactly what it is very quickly. It gives them comfort and confidence that the business is as you say it is and well run and well controlled.
And part of that record keeping also includes the monitoring. So the reporting of the financials, your financials are in order and tidy, but not only are your compliance records up to date, but your future reporting and projections and reporting of actuals against planned on a regular basis is also fresh and you can put your hands on it and demonstrate that you’re in control of the business and the business isn’t in control of you.
Yeah, and you can rehearse that sort of thing, can’t you, by at any given time having a trusted person play the role of the buyer and say, well, tell me about this. And you go, yeah, I’ve got that information. I’ve got that information. Yes, I cover it often in this monthly management report I use and so forth. And the opposite of that is when the real buyer is sat in front of you and the question is asked and you go, do you know what, I’ve got no idea. I’ll have come back to you. And the third time they hear that, think, this is looking risky. This is sounding not good.
Yeah. When they ask you a question and you go, well, that’s a good question. Never thought of recording that. It’s nothing more of a red flag than that. So let’s sum up before you like. Yeah. Yeah, that’s his concern. So let’s sum up on a business being exit ready. I think there’s three things and this is what we highlight and we break down in the business sellability score. But a business is exit ready when you’ve got a functional structure in place.
And they go, why is that important? And they say, why is that important?
So everyone knows where their place is and what needs to happen and who does what, as opposed to a typical organisational chart, which is just assigned to who does what. And it’s full of gaps, which means things slip through. So we’ve got a functional structure. We’ve got scheduling systems in place. Everything is scheduled. For all of your processes means everything’s scheduled and planned. And if it’s scheduled, it gets done.
And we’ve got some performance monitoring in place, which means we’ve got feedback mechanisms that tell us that things are being done around here the way we think they’re being done around here, which are all things that just suggest we’re in control of the business rather than the business being in control of us. Beautiful. So let’s touch on the owners being exit ready now, the owners being ready for exit. How do we know that that’s the case? And I guess the context here is,
Yeah, that’s good.
You know, why do we say this is something that’s worth considering and preparing for? Because there’s so many times that entrepreneurs, they’re purpose driven people. We understand that you have a purpose, you have a meaning in your life and you get up and your purpose up until this point has been running and building the business and fulfilling the purpose of the business. What are you going to do when you exit your business? And a lot of business owners go, well, I’m going to sit, you know, drink cocktails on the beach or I’m going to play golf. And we know that sounds great and it’s really desirable and it’ll be fun for most business owners for a week or two. But after that, they’re going to be bored. They’re to be bored out of their brain. And I think you even wrote a book about this, didn’t you, Kevin?
Yes, a short volume about cocktails because with you, you and I’ve both heard it, we say, what are you going to do? I’m gonna sit on a beach drinking cocktails. Yeah, okay, week one, week two, and our little cocktail book we can give to people and say, well, you can have your cocktails now, you know, you don’t have to wait. But I think that the point you’re making, I think is my sort of overarching thing around it would be is do a status check of where you’re at as a person. Separate yourself mentally for a moment from the business and think about what you think the business’s true value is. That’s not what you think it’s worth, it’s what its true value is to a buyer. Secondly, think about what your personal financial needs are going forward.
But more importantly, and I think this is the one I get most passionate about is what we’ve just been talking about, your post exit goals. You know, I think we’ve got a real responsibility to challenge our clients to have some clear ideas in their mind. You all of a sudden they’ve got a significant pile of money in their bank accounts. What are they going to do? There are so many case stories of people where their life becomes less fulfilling, less satisfying. In fact, some people have a real, real struggle if they don’t have an identity post leaving their business. And it’s this thing called identity crisis. This person’s been known for being a significant individual in the business community. They are the CEO of ABC limited. And that’s got status, got social status, it’s got business status. And then all of a sudden, they’re the person that was something.
Now, that if someone’s had had high business status or growing business status for 30 years, suddenly to become nothing is a bit of a shock. So what are you going to do? What could you do? doesn’t, you don’t have to start a new business, but how you can occupy your time and keep those gray cells going and do things that are really personally satisfying.
Yeah, what’s going to get you out of bed in the morning once you’re not driving a business anymore? That’s what we’re looking for, isn’t it? And, you know, there’s a parcel of work research being done by someone in New Zealand, lady in New Zealand, I’ve forgotten her name, but it’s Role Identity Fusion is the work. And it’s just understanding that as a business owner, especially if the business name is your name, that you’re so associated with that. And we need to transition and we need to get you ready. You need to get yourself ready about what you’re going to be doing next. So what’s going to get you out of bed in the morning. So there’s part of you getting exit ready. The other part is you need to go through several exits first. So as your business evolves, you need to get off the tools is the first one. Get off being the best person at delivery or the best person at implementing your product or installing your product. You then need to exit out of the tools and then into a functional management role where you’re managing the function. So if it’s a sales role that you’re doing, you’re no longer doing the sales, but you’re leading the sales team. And then you want to exit yourself out of that functional responsibility. And then you want to be in a full time CEO role where you’re only doing the CEO and you’re not doing any functional roles, but you’re leading and you’re spending all your time on strategy. You’re spending all of your time on managing the culture and you’re coaching, you’re not doing any playing, you’re not doing any of the work. And then you can exit yourself out of the CEO role, so you’re exiting yourself out of all income roles into the board. And you can be the chairman of the board, chairperson of the board, and so you’ll have a control role and you’ll still have your equity. At another point, you can then extract yourself when the timing’s right and it’s good for the business.
You can extract yourself out of the board. can resign from the board. And then you still just have an equity role. So you’ve extracted yourself from income, operational income from the business. You’ve extracted yourself from control, but you still own some equity. And then your final equity exit is when you sell off your ownership in the business. So that’s a way of thinking about it and breaking down a transitional and phasing out of the business gradually. And that’s on your terms. That’s when you’re doing it on your terms. It’s planned, it’s deliberate, it’s conscious. And when you put an exit plan in place, you can go through that transition period in your timeframe and it works for you. So what else do need to do about adding about the owners being ready for exit, Kevin?
Well, first of all, those steps you just talked about are really good. And we should make sure those are in the show notes, I think. But the interesting thing to note is if you only implement the last step of that, detaching yourself from the business, the amount of money you get is less. The earlier stages help build up that, accrue that value for you. And I don’t know, when you were saying that, I was thinking,
Actually, for a lot of people, this is quite a nice approach anyway, because it goes with the evolving lifestyle, perhaps, of someone as they mature and so forth, energy levels and interest levels change. And perhaps some of those function changes for the individual can marry well. But what you’ve got to do is you’ve got to start trusting people to do that. And so the hires you make, the coaching, the leadership and development of those individuals, starts to become the focus because of course no one will be as good as you. But you know what, they could quite often add some extra dimension to it and do a very, very competitive job for you.
Well, you’re reminding me of a client we’re working with at the moment who says they’re planning on exiting to an EOT and they’re doing all of the work in advance. They’re doing all of their exit planning and exit preparation in advance of going to the EOT so that on the point when they go to an EOT, they’re no longer involved in the business on a daily basis. They’ll sit on the board. And the question we asked them is because they had some concerns and we said, So on E-Day, when you transition to the EOT, what is the capability of the management team going to look like? And we did this exercise where we said, and I think this was your idea, Kevin, where we said, let’s create a press release as if we’re going to do a press release on the day of transitioning to EOT. What are we going to put in that press release? So that meant we’re designing the business of what it’s going to look like on that day of how how the management team are gonna run, what the business is gonna look like, and the new management team. And then if we’ve got a picture of what that looks like on E-Day, then we can reverse engineer it of what we need to install and implement into the business between now and then. And the big one for them was around the culture and understanding the purpose of the business, why it started, and making sure that the leadership team really understood that and that they made decisions using the same context that the founders were using in the business so that their legacy lived on. And that’s about reverse engineering and designing it and taking time and making sure that the culture is really ingrained in the business so that their desire, because they’ve got a picture of what their exit plan will look like, that they can have 100 % assurance and confidence that that will happen.
Yeah, and that you can do it any way you like, but that idea of a press release of that what you might say publicly about the business at that transaction date is creating a north star for the business, isn’t it? It’s allowing you to have a clear direction that is encompassing many things. And I think most people can very quickly understand the need for having processes and procedures and good client contracts and all that stuff. But the thing that people are in danger of missing out on is the emotional and cultural side of things. And we talk about a business culture with nothing our last webinar, our last X insights podcast was on that subject. But this is soft side of the emotional context of the business owner that becomes really, really important. It’s you know, it’s a bit like your kids leaving home, isn’t it? They go off to university and you don’t know whether to celebrate or be fearful for them. And it’s your business is your baby as well. And you know, the hardest part of letting go is often the bit between your ears. It’s a mindset. And we talk about getting employees to have an ownership mindset to help them grow and take up these functions in the business to allow business owner to exit. But there needs to be I’m a departing mindset from the owner as well. We should come up with a name for that one. It’s, it’s something you can’t just flick a switch. You’ve got to start picturing that, that future that that worthwhile time you’ve got with the funds you’ve got. And it you know, so often if someone starts a new business or helps, helps advise and invest in another business, that’s great. But build up some something to look forward to to get excited about that you can do. And on your terms, exit on your terms and do something new on your terms.
Yeah. Brilliant. So we know the what we’re saying is we know the owners are ready for exit when they’ve totally stepped out of any operational roles within the business today. They’re only working on the business at a strategic side, even better by remote control. And they’ve got a vision of what they’re moving on to next. Great. So what do we mean when we say, hey, look, and you’re in a position to negotiate a deal on your terms or and the numbers work?
you know, the third leg of the stool, if we like, of exit planning. We want the owners to be exit ready. We want the business to be exit ready when the owners are ready to exit and negotiate a deal on their terms. Let’s talk about that third one. What do we need to do to make sure the business is in a position where they can negotiate a deal on their terms?
It’s understanding the buyer’s perspective is the big thing. Too many business owners think I’ve got a business, I can just go and offer it and people will pay me the money because I know what it’s worth because that’s the multiplier my mate got and my profits this and so on. The reality is it’s a new owner. If we use a simple analogy of buying a car, it’s all very well the the vendor of the car, the car salesman going, yeah, it’s great. It does 0 to 60 in 5.7 seconds. But if the new owner wants something to do three seconds, 0 to 60, it’s the wrong answer. So it’s about considering what a buyer will see as being that sustainable business. you’ve got, it’s very difficult to do it by yourself.
If you’ve been in your business for donkey’s years, you know everything too well, you know which lever to pull to make that happen and so on. You can even pick up the phone to your major customers without a problem. But I think you have to project yourself into this new situation of having that negotiation. You know, the first thing you need to do is know what number you need. We talked about that earlier. And so that you can walk into negotiations knowing what you’re after and also be prepared to walk away from it.
Yeah, I think you’ve hit the key point there. If you’re going to negotiate a deal that works for you, you need to know what a deal that works for you is. So that starts with what is the business worth to you? And a deal will only work if the business is worth more to someone else than it’s worth to you. So that’s your valuation of what you’re going. Look, I won’t accept anything less than this. Now.
The only way that that’s going to come or work out is if you’ve done had some external party value your business through a buyer’s lens and go, hey, look, here’s how a buyer would value your business. And here’s the likelihood they would come up with a number. It looks like this. And then you’re in a position to assess if that number is bigger than your number. You stand half a chance. But you made the point really well that
A business like when you buy anything, it’s the buyer that determines the value of something. And it’s the same when you’re selling your business. You may think the business is worth X, but a buyer will determine and sometimes a buyer will think it’s worth two X and sometimes I’ll think it’s worth a half X. And the right buyer will see the strategic, if you’ve prepared your business right, will see the strategic opportunity because it’s a good fit for them and their business and their situation.
and finding that right person is the key and having good people will help you find them. So what do we need to do to get a deal that works for us? Well, first thing we need to do is know what the minimum valuation is for us. And then the next thing is to go, okay, so what do I want from the exit of my business? Am I looking to de-risk and then just gradually walk away and therefore, you know, here’s the numbers that will work for me. Am I looking to go Hey, look, I don’t want any sort of earn out or any sort of ongoing opportunity involvement in my business, or I am happy to keep working as a consultant to the business for one to five years, whatever. And if it’s a P.E., you might take on a CEO role. And then are the risks managed once I’ve sold my business? What’s my ongoing exposure? Have I had to make any warranties or or assurances around any outstanding claims?
and how much exposure do I have? So what’s the deal that’s gonna work for me? It’s a combination of valuation, it’s a combination of ongoing obligations, and it’s a combination of ongoing risks. That’s what comes to my mind in understanding a deal that works for me and timeframe and ongoing involvement.
Yeah, and that’s exactly the same thing in reverse for the buyer. They’re saying your business is making half a million profit a year and multiply if your industry is six, six times half a million, that’s three million. So there’s our price. Then every time as the buyer, I ask you as the seller a question, and you go, don’t know, or that’s a bit of a problem, or no, that’s not documented. What I’m seeing is risk. AndI want to get my money back every time you give me a reason to think I might not. Doesn’t matter how much the business owner thinks you be, no, it’s a good business. going, I don’t know if I can manage that risk. So I’m saying it’s going to drop down, it becomes 3 million becomes two and a half becomes two, your number was two, and suddenly it’s 1.75. How do you avoid that? You avoid it by getting all these steps put right in the first place as we’ve been describing.
Getting the business exit ready are all those things that reduce the risks. So where have we got to, Kevin? We’ve talked about the owners being able to work, the owners are being ready for exit when the valuation is right for them. They’re working on the business and not in the business. They’re coaching and they’re not playing. And they know what they’re going to do next.
The business is exit ready when it’s got a functional structure in place. It’s got scheduling and the systems are all documented and planned and working by clockwork. And you’ve got monitoring and performance monitoring in place to tell you and give you confidence that things are happening the way you think you’re happening. And you’re in a position to get a deal that works for you when the valuation of a buyer’s valuation is higher than your valuation.
You’ve minimised any likelihood of ongoing involvement, i.e. in earn out involvement. Contractual involvement is okay, but when the valuation or the price is attached to that ongoing involvement, that’s a big risk for you as the owners. And we know that the deal side of things adds up when your risks are managed or mitigated and reduced. So they’re the three things business is exit ready when you’re ready to exit and you’re in position to get a deal that works for you. Any final thoughts?
Yeah. And as as we’ve been saying that the whole process is proactive approach that benefits your business, whether you’re an exit happens or not. And as we keep saying to people, because of that, the best time to start exit planning was the day you started your business, run it properly from day one, so that you can sell it at any time. And the second best time to start your exit planning is now. And that’s what we do. We help people achieve just that.
Yeah, good point. And you can see that everything we’ve discussed today, it’s not a quick fix of, look, I want to sell my business now. I’ll get it exit ready. It’s to really maximise the opportunity and get the most from your life’s work. And to get that exit on your terms, you really want to dedicate and allow at least two or three years to get this right. If you really want to get that right. Otherwise, you’re going to exit your business with a whole lot of exposure and risk. And could end up feeling like a messy divorce.
I think we don’t want to talk about that.
There we go. Hey, thanks for your thoughts. Yeah, exit insights today, Kevin.
Thank you.
About Kevin Harrington
Kevin Harrington- Succession Plus UK Partner
Having worked in technology, telecoms, consumer electronics, payments, media and publishing, Kevin has enjoyed an interesting career history that embraces product and services businesses at all stages of their journey.
Before joining Succession Plus he was CMO with The Panoply plc, a digitally native technology services company, founded in 2016, with the aim of identifying and acquiring best-of-breed specialist information technology and innovation consulting businesses. He joined The Panoply from Tungsten Network where he was Chief Commercial Officer.
Previous roles have included working with SMEs and large international businesses. Some highlights are Managing Director at the Emerging Payments Awards and the Prepaid Awards; Managing Director of Gx; Director of Sodexo Motivation Solutions; Global Marketing Director at BBC Worldwide; Product Group Marketing Manager with Sony UK.
His career started out in a completely different direction. His first two full-time roles were as a junior in an architect’s office and a civil engineering technician. Some of his drawings and designs were constructed and are still standing.
If you would like to learn more about how to start preparing your business, then you can get more information here: https://page.succession.plus/it-all-begins-with-insights-exit-insights
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