Micro business exit strategies

Some impacts from the Covid years are still to be analysed. From HHMC’s perspective, one noticeable change is the increase in micro business owners (we define as 5 or less staff) that are considering an exit. Rod Hore explains.

For years we have seen the statistics about the pending baby boomer retirement and the impact that will have on the workforce. Maybe that time is finally here.

This is big news for the recruitment industry – there are possibly thousands of micro recruitment agencies with retirement-age owners.

How do these owners approach this event? HHMC believes each of these businesses has value. But the value is often tied into the owner, so a “traditional” sale process is unlikely to be appropriate. Here are our top tips for owners in this situation:

1. Understand that the value of your business is related to a successful transition of your revenue, staff, and clients into the new business. How easy is your business to digest for a bigger one? It is not about the multiple and is not about a substantial upfront payment larger businesses have a different sale value and deal structure.

2. The sale process needs to be managed by you. Get transaction, tax, accounting and legal support, but this will be your project to run. 3. The potential buyer is likely to be in your field of vision –geographically close and/or operating in the same sector.

4. Start now to identify and network with potential acquirers. It is up to you to make yourself known.

5. Start now to build your support team so when needed you can move quickly.

6. Start now to clean up your business. Remove non business assets and expenses; ensure contracts and compliance are current; keep your books shipshape. Enjoy the process. It is your pathway to your new life.