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Entrepreneurs ‘must make exit plan’ - 09/12/2008

Baines Jewitt chartered accountants are cautioning business owners to give ‘adequate thought’ to how they will eventually exit the business.

The warning comes after the publication of a recent report that found while in more than 70% of firms, the founders are still heavily involved in running the business, almost four in ten still have no plans in place as to how they will leave.

While more than a third of entrepreneurs said they have no exit plan in place because they are ‘waiting for an opportunistic approach from a third party’, the report found many entrepreneurs who did not have an exit plan encountered problems.

Trevor Cook, partner from Baines Jewitt said “More than 60% of family businesses are bought by private equity investors, unfortunately, the lack of planning results in difficulties agreeing a price, with owners reluctant to give potential investors access to vital financial information.

“On the positive side, good succession planning can ensure the family firm maintains independent ownership and stewardship, albeit in a metamorphosed business structure, An exit is not something which can happen easily and time spent planning for the inevitably and structuring the business correctly is seldom wasted.”

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