“To go, or not to go: that is the (current) question.”

Many of the Chamber’s 1,100 plus member companies are SMEs operating in a wide range of sectors. Some of them family owned, some investor backed, others have grown organically from turnover.

One characteristic that they do share is that, at some point, the question of an exit strategy will have been on the agenda.

I hope the Bard excuses the artistic licence in the headline and keeping the theatrical theme going, that ever useful authority, the Oxford Dictionary defines the phrase exit stage left as ‘an orderly and uneventful departure, timed so as not to detract or distract’. Sounds about right, so how can this be achieved?

Business owners planning an exit strategy must be mindful of the fact that a successful result usually takes a longer period of time than might be expected. Unless they have had previous serious expressions of interest from suitors, the timing from start to completion can take up to three years.

The journey will involve assessing the strengths, weaknesses and opportunities of the business - not just as you lovingly see it but through the cold eyes of any potential acquirers. Be prepared for the reality that this ‘health-check’ is likely to lead some adjustment to and re-configuration of company processes.

As well as being beneficial from an ongoing efficiency viewpoint, it also provides confidence that there are no nasty surprises lurking for any potential buyers that could trip you up, encourage them to reduce their valuation, or even cause them to withdraw from any deal.

As in any facet of life, timing is everything. When you decide putting the company up for sale is a critical factor too and needs to be aligned with a careful blend of business performance, external market conditions, availability and cost of funding if you are to maximise its value.

When the time arrives to solicit bids from prospective buyers, it’s important you are ready and willing to disclose appropriate information about the business. This will send a positive early message to them that you are dealing in good faith.

You should protect your own interests by getting any potential buyer to sign a non-disclosure agreement (NDA) before allowing them to access sensitive business data. This is particularly important where there is interest from suitors within the same industry sector as it’s not unheard of for competitors to indulge in a fishing trip without having any serious acquisition intention.

One of the most common points of failure in the process is deal fatigue which can result in a buyer eventually withdrawing their interest due to discussions becoming too protracted or onerous. You can mitigate this risk by carrying out thorough pre-sale preparations, having a good understanding of due diligence procedures, together with a commitment to turnaround and respond fully to buyers requests in good time.

Even better, you could demonstrate openness and professionalism by compiling a documentation pack with a comprehensive inventory of the business’s key indicators and assets and pre-empting the answers to questions that a buyer will be looking for including scalability (i.e. does a purchaser have scope to grow the business further?)

If you haven’t already done so, share your plans to sell the company with your accountants, legal and other advisers to ensure that the most appropriate structures are implemented to ensure you have the right advice and maximise tax efficiency on your eventual exit from the business.

The process will be very timeconsuming so in the meantime, regardless of whether you end up selling (or not), it’s 100% essential that you continue to manage and grow the business without allowing the significant focus you’ll need to have on preparing the exit strategy to become a distraction that can, in turn, damage performance and affect the basis of the company’s future valuation.

George Yule is a weel-kent business leader in the region. A past President of the Chamber, founding Chairman of Aberdeen Sports Village & Aquatics Centre overseeing its construction and former Executive Vice Chairman at AFC where his tenure included the club’s first silverware for 19 years!

He’s perhaps best-known however as Co-founder and CEO of Dominion Gas where he led a management buy-out and two subsequent acquisitions resulting ultimately in a satisfactory exit before joining ROMAR International as Executive Chairman to implement a growth strategy which also led to a successful exit for its owners.

Currently he is Managing Partner of BGE Consultancy providing non-executive director and exit strategy advice to SMEs.

The Chamber is currently considering adding this subject to our suite of training services.