EXIT STRATEGY

An exit strategy is a plan that is executed by a business owner to liquidate a position in a financial asset or dispose of tangible business assets once predetermined criteria for either has been met or exceeded.

planning ahead is key

Many company owners put in a lifetime of hard work into building their business, only to throw away some of the rewards by failing to fully consider how they will exit – both financially and as a leader.

Sound management over several years will add value to your business, and allow you to begin your exit relatively quickly when the time is right.

You will need to concentrate on the following key areas of your business to ensure a smooth exit.

  • Aim for a year-on-year increase in profits – reducing profits to cut Corporation Tax liabilities may make short-term sense, but it could harm your business’s perceived value.
  • Ensure your accounts are in order and up to date, giving a true picture of the business. It pays to be ready for any due diligence that may be required later.
  • Look to expand your range of customers and suppliers – over-reliance on a few key customers will undermine your business’s value.
  • Aim to tie key customers, suppliers, staff and managers to long-term contracts.
  • Maximise your relief for Capital Gains Tax (CGT) – you may be able to claim entrepreneurs’ relief which reduces the effective rate of CGT.
  • Consider avoiding substantial holdings in property, shares or leaving money in the bank which may disqualify you from this relief.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Please note that advice with regard to exit strategy planning may involve the referral to a service that is separate and distinct to those offered by St. James’s Place Wealth Management.

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