Why do you want to exit your business and what will you do later on?

One of our favourite sayings at Melo is that “everybody exits” – the only question is whether you walk out, you’re pushed out, or wheeled out! (Newsflash – walking out is the only option you have control over).

This may sound a bit harsh, but it’s true. At some point, you will leave your business.

And if you can, you’ll want to be in the driver’s seat when exiting your firm – because nothing causes stress like uncertainty and losing control.

The key to a successful exit is focusing on what’s good for you, your team, and your clients.

Your exit strategy must be right for you and your buyers if you want to receive any expected earnout payments in full.

Earnout payments can be a handy way to bridge the gap between how much a seller expects to receive and the price a buyer is willing to pay.

In simple terms, the buyer agrees to pay the seller a predetermined amount if certain targets are met after the sale is closed.

Earnout payments might account for 50% of the price paid but they may be spread over a few years after your initial payment.

However, while your buyers’ interests are obviously important, we guide our clients to achieve great exits by considering the needs of everyone involved.

Some business brokers focus on the gain for the buyer because they’re the ones who pay them.

Melo is different – our client is you, the seller. So, what matters most to us is what matters to you.

Let’s look deeper into this now.

Around three-quarters of owners regret selling their business a year after the sale

How many business owners leave their company with a high five to their team at the door?

Not many!

According to some business sale experts, when you look at small and medium-sized businesses across all sectors, around three-quarters of owners regret selling their business a year after the sale.

For many, there’s emotional pain in losing control of a business they’ve built and love. Unless the owner continues working in the business after the sale, there’s the loss of contact with the team to consider, too.

Of course, with a good exit, there’s less emotional turmoil, and it soon fades.

But it could return if the new owner ruins what you’ve built.

Apparently, across all sectors, most small business owners follow one of three paths:

• Liquidate their firms
• Give their business away
• Work until they die.

While more than 90% of sellers don’t receive as much money as they expected from the deal.

We think these are pretty depressing statistics, and thankfully, they’re nothing like ours!

More than 90% of Melo clients have achieved a good exit on their first attempt.

In fact… not to toot our own horns, but the number is nearer 100% when we include those who, for good reasons, need to enter a second round.

We’re told there are many reasons for this success, but perhaps the biggest reason is that the team at Melo are financial planners and experienced business owners, too.

So, in line with Stephen Covey’s guidance in The 7 Habits of Highly Effective People, we know the value of beginning with the end in mind.

We want to know what matters to you:

• What do you want for your future?
• What’s got you thinking about an exit?

Growing regulatory pressure might leave you wanting to escape from this sector

To be honest, we understand if you’d like to escape.

Yes, we love how financial planning can transform people’s lives both in the long and short term. But we can’t recall when so much regulatory pressure was applied to this sector at one time.

On top of your day-to-day business management and marketing, you’ve recently had to absorb and act on:

• More demanding rules around the treatment of vulnerable customers.
• A new Consumer Duty with four significant sets of demands around products and services, price and value, consumer support and consumer understanding.
• A thematic review of the retirement income advice market.
• The new Sustainable Disclosure Requirements (SDR) for investments – to understand clients’ sustainability preferences and recommend suitable funds.
• A new Senior Managers and Certification Regime (SM&CR) with annual checks on the fitness and propriety of senior managers.
• An ongoing review into consolidators of advice firms with the FCA already acting to stop business expansions where they see risks of consumer harm.
• The review of ongoing advice charges and the need for complete evidence that proper ongoing services are delivered.

And that’s not an exhaustive list.

What’s more, you must also now decide how to react to the new (potentially low-cost) “targeted support” services proposed in the FCA’s Advice Guidance Boundary Review – which signals the FCA’s determination to reduce the advice gap.

And that’s on top of all the other PESTL challenges around, which include:

• Political change – And the upheaval around new tax rules.
• Economic factors – Such as stubborn inflation, higher risk-free rates, and risks to asset prices.
• Societal and cultural factors– Including demographics, mistrust of advisers among spouses and adult children of wealth holders, lifestyle changes, and consumer behaviour.
• Technological change – And the explosion of new, AI-powered tools that could transform the productivity of advice firms but require money and time for adoption and training.
• Legal changes – Since the 2024 general election, these include day-one unfair dismissal protection, fire and rehire restrictions, enhancements to Statutory Sick Pay, flexible working, and more.

So, we really do get it.

The environment is difficult for advice firms now, and this challenging environment has driven business buyers to demand more information from sellers upfront – making the exit process much harder than it was only two years ago.

What does all of this mean for you?

Well, we would say this, wouldn’t we…

But there’s no question that you need a strong team on YOUR side to help you navigate the many tripwires around your business sale.

If you want to land a good exit for all the stakeholders, you need plans, documents, and data to show that your business is ready for sale.

This takes time and expertise to prepare. That’s where we come in.

We can help you build a strong exit strategy that’s crafted to suit your unique needs and goals – from creating smart pitch packs and finding buyers that could be a good fit for your business culture and values, to negotiating the best deal possible.

As Jim Collins said in Good to Great, “You are the bus driver.

“YOU must decide where you’re going, how you’ll get there, and who’s going with you.

“Most people assume that great business leaders start by announcing where they’re going – by setting a new direction or articulating a fresh corporate vision.

“But leaders of companies that go from good to great start not with ‘where’ but ‘who’.

“They start by getting the right people on the bus and in the right seats – and the wrong people off the bus!

“And they stick with that discipline (first the people, then the direction) no matter how hard the circumstances.”

In short, you need an awesome team behind you to achieve a successful exit.

You don’t want anyone hassling you to hurry a sale, as some brokers or direct approaches will try to do.

You need time (and sometimes years of it) to prepare your business for sale, including:

• Ensuring your data is accurate and accessible
• Understanding the acquisition landscape
• Making any business process improvements that could significantly boost your business value.

Team Melo can certainly help with all of that – and more.

While we understand if you’re stressed by any or all of the above, try to resist making a dash for the exit.

Rushing this process will only increase the risk that you’ll join the ranks of business owners who exit without the money they hope for – and other regrets.

Allow yourself time to dream about the future

In an ideal world, you’ll be on top of all the challenges outlined above. Occasionally, we find such a business, although these cases are rare.

If you’re thinking of exiting your business, it’s important to give yourself time to dream about – and plan for – the future.

What are your ambitions for your next stage of life? This is the question you and your team probably ask clients every day. But how much time do you set aside to consider that question yourself? How clear are you on what you’d like to do after exiting your firm?

Maybe you see yourself staying close to financial planning – as an educator, trainer, writer, angel investor, or guide to others selling their businesses.

Perhaps you’d love to support families who are wrestling with the thorny and emotional issues of generational wealth transfers or maybe you’d like to advise on mindful philanthropy.

Alternatively, to quote Monty Python, you might feel that now is the time for “something completely different” – like running a vineyard, buying a business that restores vintage cars, or opening a beach bar on a Greek island.

There’s no shortage of options if you give yourself the chance to dream.

Maybe you already have a project in mind and just need more time to progress with it. We meet some business owners who are in this position as they move towards retirement age or an earlier exit from their business.

However, many have no such plans in place and unfortunately, retiring full-stop, without identifying a new purpose – one that can replace your business ambitions – may not live up to your expectations.

Read more: How to find a new sense of purpose after retiring from your business.

How to create a happy and fulfilling retirement

Retirement phases

Riley Moynes – a best-selling author and former financial adviser – has some interesting ideas on this topic, based on his experiences and interviews with hundreds of retirees.

He suggests there are typically four phases of retirement:

1. The Holiday / Honeymoon phase – A period of excitement and leisure activities.
2. The Loss phase – A period of disenchantment in which we may become bored or depressed due to a loss of purpose.
3. The Trial and Error phase – In which we experiment with new activities and interests.
4. The Reinvent and Rewire phase – where we establish a new, stable routine and find long-term satisfaction.

It’s an interesting model, and Riley has a delightful way of explaining it, as you can see in the short video clip below.

However, we’re not aware of any academic studies that suggest everyone goes through all of these phases.

Each of us is unique in how we react to life’s challenges, and, as you’ll know, it’s essential to remember your individual circumstances, needs, and goals when considering your future life plans.

So, there are no fixed rules about how you plan for and live your golden years.

As the famous playwright, George Bernard Shaw, once said, “The Golden rule is that there are no golden rules!”

Retirement and happiness

The formal research on happiness in retirement shows mixed results.

• A Harvard study found that socially connected retirees who find new sources of purpose tend to be happier.
• Another study dispelled the myth that we’re happier with a gradual, rather than an abrupt, journey into retirement. What matters more is whether the transition is chosen or forced.
• While studies find that working in later life boosts happiness, the outcome depends on whether we’re working for personal satisfaction or financial necessity.

Overall, in terms of happiness after work (keep reading for more on this topic), we know that the following are key factors:

• Maintaining social connections
• Finding a new purpose
• Feeling control over the transition into

In our view, it’s a good idea to take stock of the happiness challenges around stopping work before you do so.

Sadly, this is not what most people do – many sleepwalk into this challenging period of life.

Coming up next

In the second article in this mini-series, we’ll explore why people often fail to prepare for retirement, including:

• Why most of us are terrible forecasters of our futures
• What might make us happy
• How we’ll react to significant life events.

And we’ll share two evidence-based ideas to help you overcome this classic planning trap.

Get in touch

To learn more about how we can help you exit your business successfully, please get in touch.

Hit us up in our inbox at hello@melo.co.uk or call us on 0113 4656 111.