Exit Planning for Business Owners

Martin Barron explains how accountants can add value through advance planning, helping to maximise exit value, reduce risk and improve deal certainty before sale discussions begin.

For many business owners, exit planning can begin too late. The trigger is often a life event – a health concern, a retirement decision or an unsolicited approach from a buyer – rather than a deliberate choice made with sufficient time to prepare. By the time the conversation starts, many of the factors that determine exit value, deal structure and transaction certainty have already been set.

Accountants are frequently the first to become aware of a potential exit. That creates a valuable opportunity to reframe the discussion from short-term transaction planning to longer-term value creation. Understanding this distinction is where accountants can deliver the greatest impact.

Preparing to be exit-ready

A business can be well-managed, consistently profitable and genuinely valuable – and still be unprepared for an exit. The characteristics that underpin success under an owner-manager are not always those that make a business attractive to a third-party buyer, a new management team or a lender supporting an acquisition.

Buyers and their advisers will scrutinise several years of financial and operational history, often in considerable detail. Issues that commonly emerge late in the process, when there is limited time to address them, include:

• earnings that are difficult to normalise due to owner-specific costs, discretionary expenditure or one-off items;
• complex group structures or legacy intercompany loans that are not easily understood;
• heavy reliance on the owner, with limited delegation or demonstrable management control;
• inconsistent, incomplete or poorly documented financial records that undermine buyer confidence; and
• share or corporate structures that are not well suited to an acquisition, investment or partial exit.

Most of these challenges arise naturally as businesses evolve, are built and are optimised for trading, rather than sale. Identifying, addressing and improving these areas is central to effective advance exit planning.

What advance planning involves

There are four core areas where early advisory input can make a measurable difference to exit outcomes.

1. Earnings quality and normalisation: Presenting a clear and supportable picture of maintainable earnings by adjusting for one-off, non-recurring or owner-specific items. This often forms the basis of valuation discussions.

2. Corporate structure: Reviewing whether the existent group structure, shareholding arrangements and intercompany positions are appropriate for an eventual exit, and implementing changes where required to simplify and de-risk the transaction.

3. Owner dependency: Strengthening management depth, documenting key processes, and evidencing robust financial controls so the business can demonstrate continuity under new ownership.

4. Contingency and scenario planning: Considering different exit routes – such as a trade sale, management buyout or private equity investment – and assessing the requirements, timing and implications of each.

When to bring in specialist support

Much of this work sits squarely within the accountant’s advisory remit. However, certain situations benefit from additional input from a restructuring or financial advisory specialist. Recognising when to collaborate is an important part of delivering effective client outcomes.

• Accountant's remit: Financial normalisation and earnings quality, Annual accounts and management reporting, Initial structure review and identification of issues, Tax planning for exit efficiency, Scenario analysis and gap identification.
• Restructuring specialist's remit: ​Complex group restructuring or corporate simplification, Debt advisory and capital structure optimisation, Multi-stakeholder restructuring plans, Distressed or time critical contingency planning, Independent business reviews for lenders or investors.

In practice, the most effective model is collaborative. The accountant retains the client relationship and provides ongoing advisory support, while the restructuring specialist contributes technical depth in more complex or sensitive areas. This ensures that clients receive both continuity and expertise throughout the planning process.

The businesses that achieve the strongest exit outcomes are typically those that have engaged in early and structured planning. For accountants, the opportunity extends beyond supporting clients to execute an exit. It lies in helping them to build businesses that are resilient, transferable and capable of sustaining value under new ownership.

By initiating these conversations earlier – often several years ahead of a potential exit – accountants can play a central role in shaping both the timing and the success of the eventual outcome.

 

Exit readiness: a quick diagnostic for accountants

When a client mentions a potential exit, the initial conversation can be shaped by a few focused questions. These help quickly identify gaps between current performance and exit readiness:

• Can maintainable earnings be clearly evidenced and reconciled to reported results?
• How dependent is the business on the owner for revenue generation, decision-making or key relationships?
• Are management accounts timely, consistent and sufficiently detailed to support due diligence?
• Is the corporate and shareholding structure straightforward and aligned with a potential sale?
• Are there any legacy issues, such as intercompany balances or historic liabilities, that could delay a transaction?
• Is there a clear second-tier management team capable of operating the business post-exit?
• Have different exit routes been considered, and does the business currently meet their requirements?

A high number of uncertain or negative responses is often a strong indicator that advance planning could materially improve both value and deal certainty.

 

Author bio
Martin Barron
Financial Advisory
BTG

"For accountants, the opportunity extends beyond supporting clients to execute an exit. It lies in helping them to build businesses that are resilient, transferable and capable of sustaining value under new ownership."

Martin Barron, Financial Advisory, BTG