You’ve sunk everything into building your business.
Long days and late nights have created a business of which you can be proud. A successful company which makes a meaningful impact and is valued by customers.
But now you’re looking ahead to your eventual exit. You want to maximise your valuation, so you can reap the rewards of all your hard work and sacrifice.
Many business owners look for an outright acquisition. But is there a better way?
What if you could structure a deal that helps you exit on your terms, while still maintaining some control and upside? By thinking creatively, you may be able to “have your cake and eat it too.”
Here are six components of deal structures, which you can use to achieve this kind of outome:
🔹 Seller Financing
Rather than taking a lump sum, you carry part of the sale price as a loan to the acquirer. This gives you an ongoing income stream while letting them pay over time. When structured properly, if the business grows under new ownership, your return can also be higher.
🔹 Earn-Outs
With an earn-out, part of your valuation is tied to the company’s performance post-sale. If revenue and profitability rise, you get additional payouts.
🔹 Sweat Equity
You maintain an equity stake over and above the sale price, as an incentive to stay involved in the business and make a positive contribution to growth. The acquirer benefits from your knowledge and expertise, while you share in the next level of growth.
🔹 Joint Venture
Rather than a full sale, form a JV where you retain ownership in certain assets or divisions. This gives you ongoing upside, while bringing in partners with capital and expertise. Over time, you can exit by selling your retained stake.
🔹 Spin-Off or Carve-Out
Sell a division, product line or subsidiary you own, while retaining the rest of the business. This unlocks value without losing control of your entire company. The spun-off entity can operate independently or in partnership with the acquirer.
🔹 Merger
Combine your company with a strategic acquirer’s company to create a new, larger entity. This allows you to share in the upside while diversifying your holdings. Structured properly, it can be a tax-efficient exit.
You have more leverage than you might think, when negotiating your exit. With the right exit strategy, you can set yourself up for success now and also capitalise on the future growth of your business.
#SME #M&A #business #ukbusiness #exitlaunchpad #mergers #acquisitions