The Ultimate Business Exit Strategy
How to create a sellable business that’s ready for exit.
A good CFO plays a pivotal role in ensuring a successful exit strategy for business owners. Beyond managing finances, the CFO is an integral part of the leadership team, driving profitability and growth, managing due diligence, valuation, and ultimately overseeing the transaction.
This goes beyond the role of an accountant, which some businesses realise too late in the process. Bringing a CFO in earlier will not only help you maximise the value of your sale but also ensure fewer sleepless nights!
Andy Cristin, our expert CFO, walks through the key steps to a successful business exit (or sale).
“Before we jump into the steps, an important concept for any business owner looking to sell is to make yourself dispensable!” The business needs to be in a position where it doesn’t rely on you, the entrepreneur. Even during the exit process, it’s important for the business to become self-sufficient. Owners can get caught up in the sales process, which can be all-consuming and take attention away from the core business—potentially devaluing the company in the meantime.
Steps to a Successful Business Exit
Financial Health Check
Maximise the Business Value
Business Valuation
Due Diligence
Systems and Processes
Developing an Exit Strategy
Managing the Transition
1. Financial Health Check
Before putting your business on the market, a CFO will conduct a comprehensive financial review. This includes analysing cash flow, profit margins, and revenue trends to identify any areas that need improvement. Buyers will scrutinise financial statements, so ensuring they are accurate and well-organised is crucial.
Top tip: Know your profit, know your valuation. Can your profit ratio be optimised in any way? We would do this by looking at the business’s profit determiners.
2. Maximise the Business Value
A CFO will work to enhance the value of your business before the sale. This might include:
Streamlining operations to improve profitability.
Identifying and eliminating inefficiencies.
Strengthening recurring revenue streams.
Reducing debt and optimising cash flow.
By making strategic improvements, your business becomes more attractive to potential buyers.
Top Tip: Not all revenue is good revenue. Look back over past projects to gain insights. For a business to be healthy and sellable, the revenue must be profitable, consistent, and ideally on a growth trajectory.
3. Business Valuation
Understanding the true value of your business is essential for negotiating a fair deal. When producing a valuation a CFO will:
Conduct a business valuation using industry-standard methods.
Benchmark against similar businesses in your sector.
Provide data-driven insights to support negotiations.
By having a clear valuation, you can confidently enter negotiations with potential buyers, armed with information that backs your sale price.
Top Tip: Identify what makes your business attractive to a buyer:
If it’s a unique asset, e.g. technology, then ensure there’s ongoing investment in R&D.
If it’s clientele, then make sure customer relationships are transferrable.
If success depends on acquiring new clients, have a clear cost-per-acquisition strategy to reassure buyers of future growth potential.
4. Due Diligence
Buyers will request detailed financial documentation during due diligence. A CFO ensures all records are accurate, up to date, and well-structured, including:
Historical financial statements
Tax records and compliance documents
Profit and loss reports
Balance sheets
Top tip: Having clear and well-documented financials helps build buyer confidence and speeds up the sale process.
5. Systems and Processes
A well-documented and systemised business is far more attractive to buyers. They want confidence that the company will continue to operate smoothly post-sale, without excessive reliance on the outgoing owner.
During the sale process you want to:
Implement modern tools and automation for efficiency.
Standardise workflows and document processes clearly.
Establish training systems so employees can operate autonomously.
Top Tip: Use tools like Loom to create video walkthroughs of key processes. Screen and voice recordings make it easier for a new owner to step into operations seamlessly.
6. Developing an Exit Strategy
An experienced CFO will develop an exit strategy that aligns with your goals. This will include details such as:
Choosing the right exit method - full sale, merger, management buyout, private equity investment.
Timing the sale for optimal market conditions.
Structuring the deal for tax efficiency.
Top tip: Work with professionals that have experience in business exits, including your CFO and legal services.
7. Managing the Transition
Once a deal is in place, a CFO assists in managing the transition. This includes:
Ensuring financial continuity during the handover.
Assisting with legal and contractual obligations.
Supporting employee and stakeholder communication.
Top tip: A well-managed transition increases the likelihood of a smooth and successful business transfer.
Conclusion
Exit planning is a complex process that requires financial expertise, strategic thinking, and meticulous preparation. A CFO ensures your business is in the best possible shape before going to market, designs the most appropriate exit strategy for your business and manages the documentation to ensure a smooth handover.
Whether you’re looking to exit soon or in the future, bringing in a CFO early can make all the difference.
If you’re considering selling your business, book a Discovery Call today to discuss how our CFO Services can help you plan the perfect exit.