Exit Planning

The owner wished to sell the business within the next 2 years but wasn’t making enough profits to justify a high enough business valuation.

In order to increase profits she concentrated on cutting costs which quickly resulted in an increase in profits. However, the increase was not to the required level and she was concerned that further cost reductions would have a negative impact on business performance.

She asked for our assistance in developing and implementing an exit plan.

Together we undertook a Strategic Planning day which included a detailed review of the financial aspects of the business and a benchmarking exercise against similar businesses. It became apparent that whilst cost cutting had improved the profits it would not provide the route to desired profit levels. Through the benchmarking exercise we identified the opportunity to increase the charges for temporary placements. This allowed the company to still be competitive in this sector of the market but positioned their fees more in line with similar sized businesses. A 1% increase could potentially double net profits. This initiative formed part of the action plan that resulted from the Strategic Planning day.

Implementation of the action plan resulted in the doubling of profits. This not only increased the business value but also enabled the owner to recruit a manager, allowing her to step away from the business and thus further increasing the value to a potential buyer.

The business was sold a year later for far more than the owner previously thought was achievable.

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