Heading for the exit?

Rumours hit last week that Nando’s was going to spice up the capital markets with a listing, potentially enabling a full or partial exit for the South African Enthoven family who have presided over a period of phenomenal expansion for the restaurant chain.

While cold water was firmly poured over this by the company, it raises a good question about exits and fundraising in general. In practical terms, IPOs are a rare beast and can often prove a double- edged sword for entrepreneurs unused to operating in the public eye. If you are considering selling your business what are your other options?

  1. Stay as you are – perhaps an odd first choice for this list but my experience is that most owner managers actually sell too early, giving away much potential future value to their purchasers. It can also be extremely hard for an independently minded entrepreneur to work for, and report to, someone else who often operates to a different set of targets, values and strategies. Might there be more in the tank? How willing are you to genuinely cede control and at what price?

     

  2. Keep it in the family – in many cases ensuring succession by engineering a family buyout can be an attractive option. A successful business can often raise external finance to enable this. Alternatively this could be structured so the founder can continue as the owner of part of the business, perhaps continuing in a non-executive role.

     

  3. Part sell – this route may offer the best of both worlds. You can cash in some of your chips to reap some rewards from your work whilst remaining in-role and participating practically and financially in future growth. This is typically a private equity sale, with organisations such as the Business Growth Fund playing a significant role in partial exits today.

     

  4. Trade sale – a full sale to an industry name and even competitor will often be the most important financial transaction of your life.

 

Given the Herculean efforts entrepreneurs put into building their businesses it’s often surprising to me how many fail to plan an exit beyond capitalising on opportunistic approaches without a concerted marketing effort.  We will cover successfully selling your business in full soon but, for now, see our toolkit for more information.

With the UK’s economy actually relatively buoyant post-referendum, and the weakness of sterling encouraging foreign buyers, the prospects for full or partial exits and fundraising for established and scale-up businesses look very interesting. 

Disclaimer

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

Smith & Williamson is the official sponsor for the National Business Awards’ search for the 2016 Scale-Up Business of the Year Award.

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