Business exit planning: a UK owner's guide

What business exit planning actually covers

Exit planning is more than picking an adviser and updating a data room. It is a structured programme across financial performance, commercial contracts, operations and governance - all sequenced so that by the time the process starts, the numbers are proven, the risks are known, and the surprises live with the seller, not the buyer. It matters because exits are common but rarely straightforward: global M&A transaction values run at US$3-4 trillion a year across tens of thousands of deals (Statista), ^[1] yet 70-90% of deals fail to create shareholder value, often through overpaying against a poorly prepared target (PwC) - ^[2] exactly the outcome disciplined exit planning is designed to counter.

• Financial: run-rate earnings, normalisations, working-capital profile
• Commercial: customer concentration, contract length, supplier terms
• Operational: cost base defensibility, systems, key-person risk
• Governance: clean board pack, management incentives, VDD-ready evidence

The 12-24 month exit planning sequence

Months 1-3: baseline and prize sizing

• Independent earnings quality review - what a buyer will and won't accept
• Spend baseline and category prize sizing
• Contract inventory: renewal dates, term risk, change-of-control clauses

Months 3-12: deliver run-rate uplift

• Category sourcing on indirect and direct spend - defensible, not scorched-earth
• Supplier consolidation where fragmentation is a red flag in diligence
• Margin work on the top revenue lines: pricing, mix, discount discipline
• Renewal sequencing so no cliff-edge contracts land in the buyer's first year

Months 12-24: prove run-rate and pass diligence

• Six months of finance-validated run-rate before the CIM goes out
• Vendor due diligence pack: contracts, savings evidence, category ownership
• Management-team story rehearsed against buyer diligence questions

How exit planning lifts valuation

At a mid-market 7-9x earnings multiple, £1m of durable run-rate earnings is worth £7-9m of enterprise value. A well-run 12-24 month exit plan on a £30-100m turnover UK business typically adds £1.5-4m of run-rate earnings, which translates to £10-35m of headline valuation uplift - for a fraction of that in fees.

Common exit planning mistakes

• Starting six months out - too late for run-rate to be defensible
• One-off benefits dressed as run-rate savings
• Deferring capex to flatter the number (buyers price it straight back in)
• Signing punitive multi-year contracts in the final year
• Leaving customer concentration and key-person risk unaddressed

UK Companies House register statistics give the baseline incorporation and dissolution numbers that frame exit as a standard part of the company lifecycle ^[3] - which is exactly why these mistakes are worth planning against early rather than treating exit as an exceptional event.

Questions UK owners ask about exit planning

When should I start planning my business exit?

For a sale-ready outcome, 18-24 months out is the practical minimum. Six months of finance-validated run-rate savings before the CIM goes out is what buyers price; anything less tends to be discounted.

How much does exit planning lift earnings?

On UK mid-market businesses with £20-100m of addressable spend, a well-run programme typically lifts run-rate earnings by 8-15%. Multiple that by the exit multiple and the value uplift usually pays for the programme many times over.

What is vendor due diligence and how do I prepare?

Vendor due diligence (VDD) is the seller-commissioned diligence pack a buyer's team will interrogate. Preparing means having clean contract data, evidenced savings, and a supply base that doesn't create red flags on concentration, term risk or quality.

Where this connects

Exit planning draws on our cost reduction and business strategy services, and pairs with the exit readiness cost programme and the Earnings improvement guide.