SHOULD I SELL MY COMPANY AND RETIRE?
Selling your company to retire is a rewarding decision – but also an emotional one. The reality of selling your company can seem like a daunting process unless you have the right adviser alongside you.
There are many factors and potential mistakes to consider when selling your company, and even more when it is for retirement.
SHOULD I SELL MY COMPANY AND RETIRE?
WHAT’S THE RIGHT AGE TO SELL MY COMPANY AND RETIRE?
Age is a key determiner in a company sale for retirement. Anything below the State Pension Age is classed as early retirement – which has some temporary financial consequences.
If you choose to retire before reaching your State Pension age, your pension amount may be reduced. This reduction is because you would have accumulated fewer years of National Insurance contributions than if you had worked until your State Pension age.
Therefore, it could be argued the best age to retire is indeed at or after the State Pension age, but the truth is that the right retirement age varies from person to person. After all, there are more factors at play in life than finances.
WHEN IS THE RIGHT TIME TO SELL YOUR COMPANY?
In this short video, we outline the key indicators that can help determine when the time may be right to sell a business or consider new investment. While the video is not focused specifically on retirement, the factors it explores, including market conditions, business readiness, and personal objectives, are often central to making well-informed retirement decisions.
WHEN TO START PLANNING A RETIREMENT SALE
Your health, wellbeing and professional satisfaction are personal factors that will influence your decision to retire early. Company performance is also a key determiner. Realistically, financial security is arguably the factor that can make your potential decision a feasible one.
Retiring once the State Pension age is in sight will facilitate the smoothest way to retire, in a financial sense.
If you find yourself swaying towards selling your business to facilitate retirement, the first step would be to seek the advice of an expert such as KBS Corporate.
Locating and organising key company documents would be the next step to ensure you have everything you need to pass due diligence. Keeping a checklist would be a good idea.
HOW TO PLAN A COMPANY EXIT STRATEGY FOR RETIREMENT
Planning for a company exit at retirement is about timing. Firstly, personal to you, is whether this will be an early retirement and, if so, the financial aspects of achieving this. Secondly, timing your company sale to meet the needs of the market – it is never too early to start thinking about selling your business, but patience will be rewarded.
KBS Corporate has an extensive understanding of current company sales activity, recognising when you would be well placed to achieve a high sales multiple and maximise your profits.
Deciding which company sale option to take, getting a company valuation and the due diligence process are other factors for selling a business which is much smoother with the help of an expert.
At KBS Corporate, our primary aim is to fully understand your objectives and what you want to achieve, then tailor a bespoke service for your company’s requirements.
We produce best-in-class presentational documents to illustrate the key aspects of the opportunity.
Providing the most comprehensive buyer reach within our industry, we will explore every possible avenue in our search for your perfect buyer.
You can expect us to go the extra mile to generate maximum value for you and your company, which we will demonstrate throughout our full-cycle support. Read more in our guide on how to sell a business.
6 COMPANY SALE OPTIONS FOR RETIRING OWNERS
The motivations and consequences of company sale options for retirement can differ greatly from a standard sale. There are also new options for soon-to-be retirees.
The following is a list of company exit options for retiring owners:
1. Sell the whole company
The simplest of the options available, ideal for those looking to sell their business or sell a limited company to a private buyer and exit the company completely.
2. Sell assets
An asset sale offers you the chance to remove company assets that are underperforming or to sell to generate cash.
On the flip side, the buyer can look to handpick assets themselves to gain more control of areas of particular interest or potential.
If this is applicable, it would be encouraged to speak to an expert.
3. Family succession
Completely different considerations occur here, mainly because there would usually be no transfer of funds. Early retirement, therefore, must be considered with extra caution.
Emotional barriers may affect communication between the parties, especially if the successor has different operational ideas to you.
4. Trade sale
Selling to a similar company/entrepreneur operating in the same industry or sector may leave you feeling your company will be in safe hands.
Smoother negotiations may occur due to both parties having similar knowledge of asset worth and familiarity with documents and contracts presented.
5. Management buyout
A company management team may wish to acquire all or part of your company.
Retiring and leaving your company behind is emotional but handing it over to a trusted group of employees that you brought in can feel fitting.
This can be ideal for the final option, which can be combined especially well with a management buyout…
6. Staying on in a consultancy capacity
This can go hand in hand with any of the above options.
If both parties wish for you to stay on – playing a smaller role but remaining very much a part of the company – this is something that can be agreed upon within deal negotiations.
Careful negotiations must be conducted to ensure everyone involved is aware of and happy with the new proposed structure.
If you are looking to sell or buy a business we would absolutely recommend them.
Justin Williams
FireUS Ltd
“We employed KBS to sell our business FireUs Ltd last year. We has researched into this and they stood out as the best. We were so glad that we picked them whilst it was a very in depth process selling our business, but they supported us and made the experience much easier. The main people that stood out for us with the professionalism and approach were Guy Haynes and Daniel Greenfield. If you are looking to sell or buy a business we would absolutely recommend them.”
“Would definitely recommend them.”
Katherine Prigmore
Business Development Director of Prigmore Haulage
“We used KBS to help with our partial sale! They helped promote us and worked with us the whole way through. The true value for their work came after the offer and Adam worked smoothly with us and could hear that he had our best interest at heart! Would definitely recommend them.”
“From start too finish their service was first class.”
Rodney Greer
Director of Photostatic Anglia
“We initially approached KBS and three other companies to handle the sale of our company. We choose KBS as they were very professional, knowledgeable and responded to all our queries in a timely manner. From start too finish their service was first class. Thank you KBS”
“I could not have completed this without the professionalism and personal interest that I have been afforded”
Simone Lawless
Director of Ibit Solutions
“My husband engaged with KBS in 2020 for the sale of our business. I completed a successful sale in October 2023. During the process my husband passed away and so the process became more complicated than I could have imagined. Luke Rae has been outstanding in his patience, communication and commitment to the sale of our business. I could not have completed this without the professionalism and personal interest that I have been afforded. Thank you Luke and the team.”
“The range of buyers that KBS introduced us to were of a high quality.”
Eric Luckwell
Technical Director of Datalink Electronics
“The range of buyers that KBS introduced us to were of a high quality. Throughout the sales process the shareholders were very pleased with the advice and help given to reach a good conclusion in the sale. Thank you KBS and the staff we worked with.”
HOW TO SELL YOUR COMPANY AND RETIRE IN 5 STEPS
Selling your company with the aim of retirement can be a complex process, but it will be made much less challenging by working with an experienced adviser such as KBS Corporate.
We have vast experience in navigating through all the key milestones along the way to completing a successful sale that opens the gateway to a happy retirement.
Here’s how to be successful at each stage…
1. Organise your documents and finances
A business sale is a comprehensive process in which your company will be scrutinised. Preparing the necessary documentation that allows buyers to conduct due diligence will streamline the deal.
You will need to prepare financial statements, projections and key metrics. Pulling together as much data as possible will enhance your chances of finding the optimal buyer for your company and is necessary for the due diligence process during deal completion – preparing beforehand will speed up the process. To support this preparation, our corporate finance consulting services can guide you through what to gather and how to present it effectively.
This short video explains how preparing your business financially can help support a smoother sale. Getting your financial information organised early helps buyers complete due diligence efficiently and reduces the risk of delays later in the process.
2. Get a company valuation
Working with a company valuation expert such as KBS Corporate enables you to set your expectations.
We can assist you in balancing your company valuation, rewarding you for your hard work without pricing you out of the market.
Before progressing through the next steps to selling a business, it would be wise to know how much it is worth. Working with a company valuation expert enables you to set your expectations.
The value of a company is determined by multiple factors and considers your assets, cashflow, workforce, reputation and even external influences such as current market conditions.
We typically work on an offers-invited basis, allowing buyers to present their suggested values and ensuring you are in a position of strength to negotiate the right deal.
3. Due Diligence
This is a comprehensive process that allows buyers to confirm the assumptions they have made about the financial and operational standing of your company.
During due diligence, buyers will be looking to investigate the following:
- Finances: All financial aspects of the business will be reviewed, including company accounts, annual reports, expenses and payroll
- Legal: The legal structure of the company will be analysed, covering insurance policies, regulatory compliance, supplier contracts and tax returns
- Operations: Buyers will want to understand how the company operates, looking at sales processes, products and services, and marketing activity
- Assets: Sellers will offer an overview of the company’s assets, such as property and equipment owned, fixed and variable assets, and intellectual property rights
- Employees: Employee data will be reviewed, including contracts, structure, salaries and subcontractor relationships
4. Find the right buyer
At KBS Corporate, we generally target trade and private equity acquirers, and we look at alternative routes such as management buyouts.
Ultimately, the research strategy depends on what you want out of the deal – sum, level of involvement post-sale and many more considerations that we factor in as part of our service.
We also have an extensive understanding of current business sales activity, recognising when you would be well placed to achieve a high sales multiple and maximise your company’s value.
We have made significant investment into developing bespoke, state-of-the-art systems, incorporating ‘big data’ from various leading sources to ensure we hold the latest information on who is acquisitive within your sector and has the financial means, expertise and desire to acquire and grow your company.
Following thorough identification and detailed analysis, we carefully match a buyer to your business that will achieve the best possible deal for your company.
Our Buyer Matching Engine is a bespoke, proprietary piece of software, developed by KBS Corporate, which uses ‘big data’ and algorithms to streamline the buyer research process on a global scale.
5. Hand over to the new owner
Part of the process is to conduct a thorough handover of the company, including a transition period if required.
Although you will provide an itinerary list and other reports, going through the intricacies of the business with its new owners on a personal level should be done as a courtesy of respect, and love for the company you nurtured.
After all, you have built your company to where it is and have genuine care for its stability in the present and growth for the future.
The level of involvement you will continue to have – if any and for how long – can be agreed upon in the negotiation phase. Otherwise, neither party has an obligation.
However, if both parties act in the best interests of the company then common ground is usually found.
SELLING YOUR COMPANY AT RETIREMENT: FAQS
If you sell a company for profit, you are required to pay Capital Gains Tax on anything above your tax-free allowance.
However, tax reliefs are available. KBS Corporate’s sister company, K3 Tax Advisory, is at your disposal to identify all ways to minimise your tax implications during a business sale.
Unfortunately, nobody can see into the future and know exactly what amount they will need to ensure they are financially comfortable for the rest of their life. However, deal structures can be negotiated to include a payment plan.
This is a relief on Capital Gains Tax when disposing of parts or the entirety of your company.
Retirement Relief could be eligible for claimants aged 55 or over.
SELLING YOUR COMPANY WITH KBS CORPORATE
Amongst the delicate intricacies of each step, mistakes can be made by company owners when pursuing a sale. KBS Corporate can help you avoid these common pitfalls and work with you to facilitate a successful company sale.
We utilise an active outreach campaign, targeting known buyers in multiple industries to increase the volume of interested parties considering your company. Our long-standing relationships with international acquirers greatly improve your chances of finding the ideal buyer or investor.
For over 25 years, we have built up an extensive buyer network to offer company owners various options when pursuing a sale. Hiring a reliable company sales adviser can take care of all the time-consuming, technical aspects of the deal.
KBS Corporate’s bespoke, tailored service will aid you through negotiations and due diligence, optimising the potential value of your company.
Make a confidential enquiry with one of our dedicated professionals. Get in touch.
