Firms urged to formalise exit plans


Economic uncertainty is prompting the need for business owners to have their exit plans organised, according to HLB Mann Judd.
Advisory, audit and assurance partner, Simon James, said it is vital that business owners knew the worth of their business particularly since COVID-19. This should also be supported by a formally-documented strategic growth plan which incorporated earnings growth and retention of key personnel.
This would help smooth the process in the event of a potential acquirer approaching the business.
“Business owners should always be exit-ready and, depending on factors such as the lifecycle of the business and the personal circumstances of the owner/s, the strategy for every business will be different.
“However, every business owner – irrespective of industry, sector or size – should know what their business is worth at any point in time. Earnings over the last two years have been impacted by COVID-19, making future earnings harder to forecast, but it’s critical to know the value should a potential acquirer present themselves.
“With lingering uncertainty, now is an opportune time to get documentation in order, including management reports and budgeting. It can be tedious and time consuming, but it will be a worthwhile exercise and positions the business more favourably.”
Other worthwhile actions, James said, would be to consider the value proposition of the business and familiarise with other possible acquirers and what they were looking for in potential targets.
To hear more about running a successful advice practice, come along to the ifa Future Forum, run by Money Management’s sister publication ifa, on 16 November at the Montage in Sydney.
Click here to register to attend.
Recommended for you
Advisers at DOD Bookkeeping, which received an $11 million penalty last week, received as much as 40 per cent of their remuneration via a bonus when clients purchased a property via a SMSF, according to court documents.
Private wealth manager Escala Partners has launched an end-to-end investment platform to strengthen its alternatives capability as clients seek sophisticated vehicles.
Perpetual Wealth Management has hired two advisers from Ord Minnett as part of five hires, just weeks after the rival firm announced it had picked up six from Perpetual Private.
ASIC has cancelled the AFSL of a Perth financial services firm following payments to its clients by the Compensation Scheme of Last Resort after a failed managed investment scheme.