Exit strategy                               (Industry)


A new report commissioned by bankers Coutts & Co reveals the realities of selling businesses as well as the undue optimism of sellers.   Abigail Parkin (17 July'09)

Coutts, the private banking arm of RBS, advises media sectors including music, television, film, PR and merchandising companies. Its report, entitled The Long Goodbye: Myths, realities and insights into the business exit process, claims that while 46% of entrepreneurs believe that selling their business will take less than one year, the reality is that it actually takes up to two. 

The Long Goodbye was released earlier this week and examines the challenges of  preparing for the business exit process. It draws upon the experiences and insights of some of Britain’s successful entrepreneurs, industry academics and experts from within Coutts.

Interestingly, the report claims that on the day of actual sale, only 36% of entrepreneurs felt elated or happy while 32% felt simply relief and 26% experienced fatigue and unhappiness. On a financial level, 59% of entrepreneurs overlooked their financial planning until the last minute, despite 79% agreeing that it is an important part of the process.

The report also found that:

* 71% of business owners, consider themselves ‘exit obsessive’s’, who think about selling their business on at least a monthly basis;
* While one in four decided to retire early following exit, 40% still needed the thrill of running a business and went on to start again. 51% also still have some direct involvement in the business they have sold;
* 89% of entrepreneurs supported the creation of a specific exit plan;
* Before the exit, entrepreneurs rank their priorities, as price (28%), readiness of the business (17%), cash exit (11%), market conditions (7%), long-term security of the business (4%) and a fast exit (2%);
* However post exit, entrepreneurs rank their priorities as price offered (36%), followed by the long term security of the business (15%), suggesting that they are more concerned about its survival after the sale, and a fast exit (12%) becomes considerably more important; and
* 50% of respondents said that their best advice for someone planning to sell is to get the right advisers on board.

“This report has shown that alarmingly, two-thirds of entrepreneurs are risking long-term business success by not giving proper thought to their exit strategies," said Andrew Haigh, managing partner, Coutts' Entrepreneurs Client Group. “Entrepreneurs make up more than a third of our client base and this represents a huge source of expertise and experience. But this experience has also shown that the exit, which is often the one opportunity to realise significant personal wealth is the final challenge, as entrepreneurs extract themselves and the financial value they have built up in the enterprise.


“40% of entrepreneurs gravitate back towards starting or running a business post exit and it is this energy to create businesses that pushes entrepreneurs to thrive and drive a countries economic well being. The wealth created through the successful exit is an important element in fuelling this cycle.”

The 20-page report, which is available by visiting www.coutts.com/entrepreneurs contains case studies, interviews and analysis from entrepreneurs in a variety of industries, both pre and post exit.

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