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| Are
you contemplating passing on your business to your children
or other family members, or a family trust? Or are you considering
selling to your co-owners or to a third party? If so, make
sure you put in place an exit strategy to maximise your returns. |
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Food
for thought
Your exit strategy should cover the following areas:
Ensuring that your business structure is tax-effective
Entering into agreements with your co-principals to facilitate your
exit
Choosing your optimum exit option
Grooming your business to improve its value through implementation
of an operational business plan
Preparing and implementing a master exit strategy plan
Integrating your personal financial planning with your business
exit planning
Achieving a successful disposal for the maximum after-tax price.
Even if you are not planning to exit your
business in the foreseeable future, you should put in place the
foundations for future growth and risk management, namely:
A tax-effective structure (with regard to capital gains tax, inheritance
tax, income tax and corporation tax)
A business continuity plan (covering, for example, shareholders’
and partnership agreements, employee contracts, keyperson insurance)
An operational business plan
Where appropriate, business valuations (or opinion as to value).
Surprisingly, some private business owners
overlook this planning completely, despite the fact that most of
them are in business to build a capital asset and all of them must
leave their business some day. Building capital value as well as
earning a living is the difference between being in business and
working for somebody else, so it makes good sense to maximise the
exit value by long-term planning.
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