I know countless businesses, where the owners have been on course for a successful exit.

But for various reasons, everything has fallen apart before the finish line.

The final stages can feel like a marathon. And sometimes the exit process can take many months – or even years to complete.

Yes, sometimes a failed exit is beyond your control, but there are things to watch out for, to reduce the risks. Here are just a few of them…

1️⃣ VOLATILE VALUATION

During the exit negotiation process, the perceived value of your company can fluctuate. Variations in your monthly financial reports, economic headwinds, negotiating tactics of buyers and a bunch of other things can all have an impact. Being on the front foot and having an effective plan can lower the risk of things going wrong.

2️⃣ DUE DILIGENCE FAILURES

When a potential buyer shows interest, they’ll want to scrutinise your business – so you need to be ready. If you wait until you’ve started negotiations, it will feel even more rigorous, time-consuming and invasive than it should. Make sure you know exactly what’s required for DD – and have it way before you need it.

3️⃣ GOLDEN HANDCUFFS

Buyers often include ‘golden handcuffs’ in the deal structure to ensure key team members (including yourself) stay on beyond the exit. The realisation that you may feel trapped and without any control, once the deal completes, can lead some owners to sabotage their own exit. So, negotiate these terms wisely.

4️⃣ ROLLERCOASTER RIDE

Selling a business is more than a financial transaction. As you approach the final stages of an exit, you might feel a rush of emotions – excitement, anxiety, relief or grief. Anticipate and prepare for these feelings to ensure a smoother, less stressful transition.

5️⃣ POST-EXIT BLUES

And talking of transitions, once the hustle and bustle of the exit are over, make sure you have a clear plan beyond it. The majority of business owners have no problem figuring this out. But without a clear visualisation of the future, it can leave owners questioning the point of an exit, right up until the last minute.

The final stages of an exit come with their share of challenges. You can navigate these potential pitfalls and reduce a few of the risks, with foresight, preparation and above all, resilience.

#sme #ukbusiness #exitplan #M&A