Realising capital invested in your business

In association with

As a business owner part of your capital will be invested in your business. Realising that investment will be central to your retirement planning, and to achieve that successfully it is essential that you have an exit strategy.

By Phil Stephenson, corporate  and commercial partner, KBL Solicitors LLP.

The first step must be identifying who is most likely to buy your business from you.

If it is the people you are already in business with you’ll need a partnership or shareholders agreement setting out the terms on which they will buy you out when you are ready to retire. If it is your management team take advice as to the options available to them to finance the acquisition.

If neither of those are possibilities, you’ll have to find another buyer. If that’s the case, take a good hard look at your business and ask yourself what can be done to get it ready for sale.

Your business needs to be made as attractive to potential buyers as it can be. If profitability can be improved or there are other issues that need to be addressed it is important that you do so. Those profits will need to be sustained for at least three years to get the best price.

At the same time, consider who you want to market your business. Speak to a few potential advisors and check out their track record of selling businesses similar to yours. It can take time, so don’t wait until you are ready to retire. Start early, be patient and sustain your efforts in the business. It will all be worth it in the end.