How to plan for a decent 5 year exit strategy?

Discussion in 'General Business Forum' started by greystuff, Sep 21, 2021.

  1. Construction Training

    Construction Training UKBF Newcomer

    3 0
    hmmmmm very interesting post, I feel my business is similar to your own, where I am the business. We deal in the main in the construction industry, whilst not considering an exit strategy just yet (I'm only 43), people deal with the business because they want to deal with me.

    My plan is to grow the business to a point where I can employ others to assist me (and make my life easier), this in turn would make the business more attractive and would provide me with more flexibility
     
    Posted: Sep 24, 2021 By: Construction Training Member since: Nov 4, 2018
    #21
  2. roydmoorian

    roydmoorian Verified Business ✔️

    1,984 349
    Exit strategy ? - Two bottles of single malt and lots of easy to swallow pills !!!
     
    Posted: Sep 24, 2021 By: roydmoorian Member since: Nov 6, 2009
    #22
  3. The Byre

    The Byre Full Member

    11,614 5,045
    A day late but here goes -

    I was you. This was the mid-to-late 90s. I had umpteen people working for me as freelance journalists in Germany supplying techy articles for UK and US trade magazines. All these people were specialists in tech and/or business subjects. My biggest customer approached me about buying the company and I consulted a friend who worked in the M&A dept. at IBM near Stuttgart.

    "What's going on and how the F do I even go about this deal? I fear that they only want my knowhow and the contact details of my journalists and then they'll offer me a few thousand and I'm stuffed!"

    I described my day - translating German texts into English, pointing them at juicy subjects, following up on details - it was 1001 tasks and I was clearly the bottleneck in the entire operation. I wanted to sell and I was fed up with the entire rat race and hectic lifestyle.

    "You are what one calls in English a busy fool!" he said simply. "Tell these people that the company is not for sale, but don't worry! They'll be back! Get rid of your tasks one-by-one, starting with translating and work through everything, until you are out of a job."

    We did it. One by one, the various tasks that I hated were put on the shoulders of the more promising candidates. At first, they did this for a percentage, but later, the teams were headed by pukka employees. We developed teams that worked without me overseeing every step. It took over a year, but the interesting thing was that the bottleneck (i.e. me!) was gone and I was earning more and not less!

    The company got a new corporate structure, we had departments and processes. We invested in fax machines (remember them?) and created our own electronic bulletin board so that articles could be filed electronically. We even had a website with live video feeds from the likes of CNN and CNBC.

    We were speaking the same language as our US customers and we were waaaay ahead of our UK customers who mostly didn't even understand what the Internet was or what the possibilities were that the Internet gave one. UK publishing houses were blind to what was going on and didn't see the future being handed to them on a silver platter!

    They trusted in the future of print - which is why they are all struggling today. In the 90s they were flush with money and were launching one new title after another instead of investing in the future. The mice were having their cheese moved and they didn't realise it was happening!

    I sold my erstwhile job as a going concern with about 150 people beavering away, writing deathless prose like "Sony looks to the future!" and "Another startling innovation from Texas Instruments!" in 1999 and at the grand old age of 50, I retired.

    I started a lifestyle business in the UK and invested in a steady business in Germany that did not require much input from me. I'm still bouncing off the walls with funky ideas while the mice in my industry are wondering why the cheese store is getting smaller and moving further away.

    P.S. If you keep mice, don't feed them cheese - it's not good for them! It makes them fat and lazy and gives them bloat.
     
    Posted: Sep 25, 2021 By: The Byre Member since: Aug 13, 2013
    #23
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  4. Clinton

    Clinton UKBF Legend

    5,244 2,411
    @greystuff , make your business sellable ...or close it down when you're done making your money.

    That's a non-starter. Nobody in their right mind would buy a business in installments like that.

    The contract for the sale of a business - the Share Purchase Agreement - tends to be 60-100 pages long and costs anywhere from £10K to £30K (each!). It's a very complicated contract, and that's for a simple sale of 100% of the shares. What you're suggesting makes it 10x more complicated.

    And if you stop and think about it, you'll recognise why. As ownership percentages change, voting rights changes, control of the company changes. Detailed provisions would need to be included to prevent all manner of bad blood actions by both buyer and seller at different levels of ownership, and to provide both parties with adequate protection. Clauses would need to be inserted to resolve conflicts and agree withdrawal options if either party feels the arrangement is not working for them. And how on earth are you going to draw up the reps, warranties and indemnities that are standard in SPAs?! Frankly, I can't see any transaction solicitor even taking it on!

    What you're desperately trying to do is find some way to sell an unsellable business.

    There isn't one.
     
    Posted: Oct 13, 2021 By: Clinton Member since: Jan 17, 2010
    #24
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