Surrey-based TWP Accounting is urging business owners across the region to begin planning their exit years before they intend to sell or step back.

TWP Accounting says that with 5.7 million private sector businesses operating in the UK it means that there are many business owners who are unprepared for the potential lifestyle and tax implications that come with an exit.

TWP Accounting says the earlier owners start planning, the better the outcome tends to be.

“Commonly, business owners are told that they need to give at least five years of thought and preparation to exiting a business,” said Philip Munk, Partner, Corporate Finance at TWP.

“However, it is not uncommon for many businesses to have a 10 or even 15 year plan ahead of exit.

“It may seem extreme, but it gives owners the breathing room to build value in their company, tweak the strategy for the fast-changing dynamics of the economies, prepare their team and create a tax-efficient structure.”

Business owners weighing up their options have several routes open to them, according to TWP.

From a straightforward trade sale to a competitor or corporate group, through to a management buyout by the existing team, transfer to an Employee Ownership Trust, succession within the family or a sale to private equity or venture capital investors – each route has its own unique benefits and challenges.

For example, it may carry its own preparation requirements, timescales and tax implications, which is why TWP Accounting recommends owners take advice on the right fit well before they need to act.

“Financial records are often the first thing a buyer scrutinises and poor or inconsistent accounts can reduce a sale price by 10 to 20 per cent or derail a sale altogether,” explained Philip.

TWP says that buyers typically expect at least two years of accurate, professionally prepared accounts, and any changes intended to improve profitability need 12 to 24 months to show up as a sustainable trend.

The firm also points to a common gap in expectations, with owners often valuing their business well above its true value and ultimately feeling disappointed by outcomes.

Philip Munk, Corporate Finance Partner at TWP Accounting, added: ““Too many business owners only start thinking about exit once they’ve already decided to sell, and by then some of the value has already been left on the table.

“The businesses that get the best outcomes are the ones that treat exit planning as part of how they run the company for years beforehand, not something to bolt on at the end.

“Whether that’s tidying up the numbers, closing gaps in governance, or simply understanding what a buyer will actually pay versus what an owner thinks the business is worth, the earlier we get involved, the more options our clients have when the time comes.”

TWP Accounting works with business owners across Surrey and the South East to prepare their companies for exit, whatever route they choose.

To find out more about their corporate finance services, please contact us.