Exit, expand or sit tight? Why the time is right for businesses to explore all options

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For most, the planned sale of your business could be part of a long term strategy, the proceeds of which were intended to provide you with a comfortable retirement.  However, you may now find yourself having to put exit plans on hold and looking at ways to diversify the business to help speed up recovery. But it may not be all bad news. With crisis comes opportunity and now could be a good time to capitalise on previously unconsidered opportunities, so what are your options?

Expansion and diversification

The UK Government has taken drastic steps to stem the economic impact of the pandemic by slashing the Bank of England base rate to 0.1%, and with cheap finance now could be a good time to lend money to diversify and expand your business.

While business valuations are likely to be depressed, now might be an opportunistic time to make an acquisition. Bolting on a business complementary to your own could strengthen and secure the business’ future. With interest rates so low, putting cash in the bank to work by investing in or buying a business can be a better way to generate a return - especially if sellers are willing to reduce asking prices for an accelerated sale.

That said, we would not advise rushing into taking on more debt or buying a business without having a clear strategy in place. If your business takes on additional borrowing, it is always prudent to ensure it is properly protected.

Selling your business

Whilst you may not get maximum value for your business right now, there are buyers out there. Many have had time to re-evaluate their priorities, and whilst an exit might never have been on the cards, the current climate potentially offers business owners a chance to sell out and realign their goals. Of course, it will be challenging to sell businesses that have temporarily been shuttered as values are based on historical financials, but we are seeing sales going through.

If your business has been struggling and you don’t have a strong desire to continue running it, you may be better off selling at the current valuation rather than putting more money in. If you drain too much of your personal assets trying to save the business, it will be hard to move on with the next phase of your life.

Sadly, many owners who have saved enough for retirement end up delaying that day because they’ve tapped into their savings to rescue a business that will take many years to come back, if it does at all.

Weather the storm

Wait and see is always an option, but we would strongly advise our clients against doing nothing. One thing is certain, the pandemic has forced change - whether we like it or not! There isn’t a single person it won’t have impacted which means consumers will change their behaviours as a result and with it, businesses have also had to adjust. Those that take control and plan their strategy will almost certainly improve their chances of coming out the other side, whereas those who go with the tide may find themselves tired and washed up without the resources to continue.

Whether you see the next 12 months as an opportunity to diversify and expand, batten down the hatches and ride out the storm or the catalyst to retire and try something else, we cannot understate the importance of seeking advice. For many, a business is often far more than a way to earn money, it is a passion and a way of life. It can be difficult to make an objective decision when you’re so close to your lifetime’s work and seeking professional advice may be the key to making the right decision that you won’t live to regret.