Whether you’re planning to retire, sell up, or simply close shop, exiting your company is a big decision. Let’s cut through the complexity and look at what really matters when you’re ready to move on and exit your own company.
What’s Your Business Actually Worth?
We get it, your business is your baby, but emotional attachment doesn’t always translate to pound signs. Here’s what actually adds value to your business:
- A solid leadership team that can run things without you. If the business falls apart the minute you leave, buyers won’t be keen.
- A diverse customer base. Relying too heavily on one or two big clients is risky business.
- Clear industry value markers. Different sectors value businesses differently – some look at profits, others at assets or cash flow. Know what matters in your industry.
- Clean, organised books. Nobody wants to buy a financial mess. Having clear, reliable numbers shows you’ve run a tight ship.
Getting everything in shape may feel like a daunting task but at Brisan we can work with you to help you build value and become sale ready so you can exit your company with the value you want or need.
Exit by Selling Up: Your Options
You’ve got several routes to consider:
- Sell on the open market: Traditional sale to another business or investor
- Keep it in the family: Pass it on to the next generation
- Management buyout: Let your team take the reins
- Employee Ownership Trust: Sell to your staff (currently tax-free!)
Remember: Most sales aren’t a clean break. You might need to stick around during the handover, and payments often come in stages. Buyers typically want to spread payments out, while sellers prefer the money upfront – this needs sorting in your initial agreement.
What if You Rather Just Close Down?
If your company’s worth less than £25,000, you can simply wind it down and dissolve it, through Companies House. For anything more, you’ll need a licensed insolvency practitioner to handle the liquidation properly – depending on how much liquidity (cash) you have in the company, it can be more cost effective to pay a liquidator compared to extracting dividends to reduce the value, this is because the Capital Gains Tax is cheaper than tax on dividends.
The Tax Bit When You Exit
Good news if you’ve been an officer (director/company secretary) in your trading company for at least two years – Business Asset Disposal Relief (BADR), formally known as Entrepreneurs relief, could save you money.
You can claim this on up to £1 million of gains in your lifetime. After that, standard Capital Gains Tax kicks in. Current BADR rates:
- Until 5 April 2025: 14%
- From 6 April 2025: 18%
Planning ahead is incredibly important. If you have an exit figure in mind, you may need to action sooner to take advantage of the tax rates or alternatively you may need to consider building value in your business because your ‘walk-away’ money might not be enough as it stands once you consider the taxes involved.
Ready to Plan Your Exit?
Don’t navigate this journey alone. At Brisan, we’re here to help with:
- Getting your business ready for sale: valuations, benchmarking, systems audits and finance process recommendations
- Handling the selling process: share purchase agreements, due dilligence support, Company Secretarial and Companies House Filing
- Closing Down: Applying to strike off, deregistering for taxes, cessation accounts and liasing with the liquidator
- Sorting out your tax position: preparing for your tax liabilities and filing your returns
🚀 Ready to plan your exit strategy? Let’s talk. Remember: The sooner you start planning your exit, the smoother the journey will be.
