The Exit Club is…
A private club for small – to medium – sized businesses considering their exit options.
“Exit” in these terms means any of the following: family succession, a trade sale, a sale to management, floating or closing the business.
The professional parties involved in these corporate finance transactions include an accountant, a solicitor, and often a banker/private investor or venture capitalist and the business owners will need to choose and manage these professionals.
Once the decision has been taken to exit, a business will often turn to their lawyer or accountant for advice. Usually, this initial point of contact is the trusted general advisor who may not have a background specifically in corporate finance; the family lawyer for example.
Often, there is a charge for this initial advice (as the adviser is a retained adviser) and sometimes when discussed with a professional operating in a different area of specialism (law or accountancy for example) the advice can conflict. In these interesting and challenging times, the advice can conflict further by the time a funder (either debt or equity provider) is consulted. All of this can result in expensive and lengthy meetings before a decision is made regarding which adviser to appoint to the deal.
Rarely can someone in business obtain well thought-out, joined-up advice from professionals operating across several disciplines simultaneously. When this does happen, the critical path to deal completion is shortened and deal costs are minimised.
This was the impetus for setting up The Exit Club.
- You save time, through access to the full complement of ‘quality’ advisers needed to achieve their objective (succession, sale, management buy‐out, flotation or closing the business)
- You save money, through the initial ‘no obligation forum’ and critical path forum focus
- You gain access swiftly to the right advisers, in the same place at the same time
- You must be a practitioner with a number of years’ experience acting in the capacity of a principal. It is expected that 50% or more of your working time will be spent on your specified area of exit expertise or the management and supervision of a team of practitioners working in the field.
- You must be able to demonstrate a track record of completing deals in your area of expertise and it is likely that you will be a qualified accountant, lawyer, banker, or financial adviser, or otherwise be engaged in Corporate Finance services in a professional capacity.
Mr Jones is sixty years old and knows that he should have a plan regarding when he should retire from the business. He doesn’t have any idea of how much the business might be worth but knows that there is some value in the business that he has built up over the years.
Mr Jones approached the Exit Club in some desperation a few weeks ago having received conflicting advice regarding what the possible value of his business is. Mr Jones had always considered that ‘the business is his pension’ and consequently has not invested into a pension scheme over the years. With the recent economic meltdown, Mr Jones turned to his accountant who has acted for his company for twenty years. The accountant advised Mr Jones that the business was worth possibly two years profits and that he might have to wait some time for the cash from a purchaser due to the current economic climate.
Mr Jones decided to check this advice out with his Independent Financial Adviser who advised that in his experience the business is worth around five years profits and that he might know of a possible buyer if Mr ones would like to explore further.
Who is right and what should Mr Jones do?
Mr Jones contacted Tracey Williams at the Exit Club who reviewed some historical accounting and business information and invited Mr Jones to the next private exit forum. With Mr Jones permission, Tracey shared the information in advance with two specifically chosen experts and arranged for Mr Jones to meet at the Experts premises where a forum took place.
Mr Jones received advice from:
A member of the Society of Share and Business Valuers who is actively engaged in business sales and who provided information on valuation along with information on actual sales proceeds being achieved in the sector and the region
- A Corporate Finance Accountant who explained how delicate a business sales process is. A typical sales process was outlined along with potential pitfalls and how to avoid them
- A Corporate Finance Solicitor who was able to explain industry specific issues to be aware of and what to look out for in a Sale and Purchase Agreement in terms of covenants and warranties
The meeting concluded with Mr Jones requesting a summary in writing from each participant and their business terms for his consideration.
“I came to the meeting with a few pre-conceived ideas that I would be ‘sold to’ and perhaps would leave more confused than when I arrived. However, the people I met demystified the process for me. I realised that whilst my accountant is great for working out my tax bill, this is a specialist area and I could easily lose value by working with the wrong people. Importantly, I know how and who I want to proceed with and have set a timeframe in my own mind that I know I want to work to – it was excellent!”