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Eight years ago, Longridge Print chairman Vic Long finally took the decision to step away from the company he had set up at the end of the swinging sixties with a bit of help from a Multilith press running in a garage and a platesetter in an airing cupboard.

"My father set up Longridge to support his family. He worked hard and everyone that knows him said he would never retire but from working with him, I always knew he would," explains Neil Long, Vic’s son. After spending the final six years of his tenure acting behind the scenes, Vic left the Crowborough commercial printer in 2008, making Neil – who at the time was a company director – managing director, while retaining part ownership.

While each individual has their own reason for exiting a business, their route out of the industry – whether through a sale, family succession, merger, stock market flotation or a closure – will be different from the next. However, there are a number of key issues you need to consider before heading for the exit sign. The most obvious is to ensure you’re making the right decision at the right time because, after all, it’s your business that you shed blood, sweat and tears to build up so you’ve earned the right to have a say in its, and your, future.

Putting in place an exit strategy, especially when starting a company, helps maximise the value of your business further down the line. By planning your departure from the start, it will help you to mould your business into the shape that you want.

Paul Holohan, chief executive of Richmond Capital Partners, agrees that planning early is vital . "You need two years to plan your exit well. You should also get good advice as early as possible as those two years are a massively important sales and marketing pitch."

Giving yourself a time cushion is advice echoed by Principle Partners managing director Ian Brown. "You need to prepare for it. People often come to us and say ‘I want out’, but if they’re in a position where sales are down, I’ll tell them that they will get ripped to pieces if they try to make a quick sale. Planning is so important."

With a time buffer in place, there are a number of options you can choose from – some more desirable than others. The first key detail is establishing how much your business is worth. Brown says that this all comes down to the condition and state of the company. "The number one priority is how you can make your lifelong investment work and how you can maximise the return from it."

He adds that every situation is contextual. "A litho business, dependant on its state, is not going to be that saleable. If it’s digital or has an element of added value, you have more of a chance. You have to be realistic, but that’s also not to say that it is impossible either. It is no secret that print is not a desirable place right now, but if you can show that you are profitable, then that is clearly a better situation."

A realistic outlook
Following your accountant’s advice to make the business as tax efficient as possible is also a sensible step, according to Long. "Clear up any possible liabilities you have outstanding or they could come back and bite you in the behind," he advises.

If selling the business is the preferred outcome, being prepared, being sensible and, importantly, being realistic are three ways to help make the process run as smoothly as possible. According to Holohan, the real test of the value of any asset is what a buyer is prepared to pay. "The only true way to value a business is to actually try and sell it." This can be a risky business as many owners only want to take this route when they are ready to sell, but they need to know an approximate price before deciding whether or not to put the business on the market.

Based on his personal experience of helping out in such situations, Brown says that the biggest problem he encounters on business sales is managing expectations. "You pour your blood, sweat and tears into a business and, as a result, you build up a value of that company in your mind. The value given though is often not what is expected."

So what happens then? Brown says the key is to decide whether you still want to leave at this point in time. "Business owners disappointed with the valuation given to them will sometimes opt to stay on for a while longer in the hope that the company’s worth increases. But more often than not, it will only go down."

Safeguarding jobs
Holohan also offers a cautionary word of warning to those wanting to sell. "Never ever accept a verbal, off-the-cuff valuation. This is unprofessional and, at worst, is insulting to you as your business is probably your greatest asset – both emotionally and financially. It is better to pay a sensible fee to value the business and to insist on a written confirmation outlining the rationale."

Valuation aside, another key issue to be addressed with a potential buyer is the future of those that you may leave behind. What are the intentions of the new buyer because they may be after your clients and kit but sadly not your long-serving dedicated workforce.

"Right now, if you sell your company, there is no guarantee whatsoever that whoever buys it off you will keep that management in place," says Brown. You must try to safeguard your employees’ jobs by completing comprehensive due diligence with the relevant parties.

Not all business owners wanting to exit their company will be prepared to tread such a route as finding a buyer for a company can be difficult at the best of times. "I anticipate that mergers will start to play a bigger part of what we do," says Brown.

However, he offers a word of warning: "While a merger could create a stronger, more cost-effective company, it could also slow down your exit. Previously, if you were looking for £500,000 for the business, you may be offered £250,000 of that then an earn-out would follow. But now, through seller finance you may only get £50,000 of that down first and it will take longer to get the sum you want."

Often the extent and quality of the planning and research conducted beforehand will determine how well a merger will pan out and the quality of the goals it will achieve. "It won’t always be a quick exit but do you want 50% of something or 100% of nothing?" asks Brown. "That’s the question you need to ask yourself."

This leads on to the prospect of closing the business. For many, this will be the last port of call but, in most cases, should be a more straightforward process than the other options. The priority in this situation is to get in touch with the authorities to pay off outstanding debts and VAT.

Ultimately, as Brown explains, each situation is contextual and, when the time comes, it is necessary to seek professional, expert advice. But one thing is certain – planning an exit strategy is essential. If "education, education, education" was Tony Blair’s mantra for the 1997 general election, then perhaps "preparation, preparation, preparation" should be at the forefront of your plans if you decide to head for the exit.

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HOW TO EXIT A BUSINESS: THE OPTIONS
Selling your business
Get the business in good shape. Cut overheads, reduce debt and get your finances into good order. Be realistic in the value of your business and your expectations. The value you are given will often be less than your own assessment of the company’s worth.

Management buyout
Identify a buyer for the business and complete the necessary due diligence. If you are leaving a management board behind, enquire as to what the new owner has planned. If the sale is to your existing management, make sure they are capable of running the business you leave.

Merger
This will allow for the creation of a stronger business that can reduce competition but it can also prove to be a time-consuming venture.

Stock market flotation
If your company is a smaller business, a stock market flotation may not be the most suitable route. An outside investor is only likely to show considerable interest if your company has growth prospects and they will want a return on investment.

Closing the business
The priority in this situation is to get in touch with the authorities to pay off outstanding debts and VAT.

If you own a print business and are thinking about exiting the industry, the government’s Business Link website at www.businesslink.gov.uk is an invaluable source of information.