Exit Strategies

Sale strategies for your business

Once you have made the decision to sell your business and taken any steps necessary to prepare for sale, you will need to consider who the most likely buyer is. Some of the most common sale strategies are: trade sale, private equity, management buy-out, management buy-in, employee ownership trust, and initial public offering.

Trade Sale

This is the sale of the share capital of the company, or the business and assets, to a strategic investor operating in the same sector. This exit route can often provide an immediate and complete exit for existing owners, although in some circumstances an earnout structure may also be appropriate.

Private Equity

A sale to private equity can provide a great option where the owner is looking to remain involved in the business. Private equity will back the existing management team, but also allow owners to de-risk their position and take some value out of the business. Private equity teams are generally very experienced, will be able to provide capital for growth initiatives, and may help you to get a higher value for the business when it is eventually sold. In return a private equity team will require the business to be well managed.

Management Buy-Out (MBO)

This is where the existing management team acquire control of the business from you. They are usually backed by equity financing from a private equity provider. The private equity provider will be reliant on the management team remaining in place for a period following investment.

Management Buy-In (MBI)

This option is very similar to an MBO, except that the management team come from outside of the business. Often the incoming management team compete with other purchasers to acquire a suitable business.

Employee ownership Trust (EOT)

In some specific circumstances an EOT may be an appropriate strategy. This involves a trust owned by the employees acquiring a controlling interest in the company from you. The agreed price for the shares can be made in instalments, with the EOT being funded by a combination of bank loans, excess cash in the business, and loan notes from the sellers. This structure has certain tax advantages for both the existing owner and the owners of the trust. 

Initial Public Offering (IPO)

For certain types of businesses an IPO may be a suitable method of sale. IPO refers to the process of offering shares in a private limited company to the public via a new share issue on the stock market. IPOs will typically suit a company that has a large and diverse customer base, a great management team and growing revenue and profits. 

What it means for the business 

Selling your business can be a busy and stressful time. Having the appropriate senior management team in place can help ensure that not only does a sale process happen more efficiently, but also that your business doesn’t suffer as a result.  

Artemis Clarke helps business owners find finance directors that have the experience to support them. Not just to help them survive, but to help them thrive – whatever their business goals.

Speak to us about how the right financial help could make a difference to your business. Call 0117 244 1891 today.