Exit Strategy and Building Capital Value

It can often take two years to achieve a beneficial sale of a business.  Developing a good exit strategy for your business is something you must attend to in the meantime.  Getting ready now will mean that your IT business will always be at its possible peak in value and as a result, it will run a lot smoother, with reduced risk and exposure to claims between now and when you do sell.

IT businesses have a real advantage in the current economic climate as it is an area that banks will still lend to and with low capital requirements it is a sector where multiples are still comparatively healthy.  And so as well as planning an effective exit strategy, you must look to building capital value in your business also.

Even if your Information Technology business is very profitable, it may still not achieve a favourable sale price by some margin if it carries risk.  If your clients are tied into long term rolling contracts, your general terms and conditions limit liability and lock in the value that key employees create, then your business will appeal to a larger number of investors and will achieve a higher sale price.

By working with experts in the business sales, acquisition and merger market, including corporate finance advisors, we can give you the average multiples for your business sector, apply it to a company of your size and give you details of recent IT business sales.   ORJ’s IT legal team can give guidance on tax, with the aim to establish the best net realisation with the least amount of risk for when you put your exit strategy into play. Preparation is everything, and so preparing your business for sale now is the best strategy even if your plans are not to sell in the immediate future.

If you would like to discuss how you might be able to realise an effective exit strategy for your business, or if you would like to discuss your options, email lorraine.smith@orj.co.uk or call 01785 223440.

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