For business owners
What happens to your business when you stop?
Most owners' retirement plans rest on an asset nobody has valued, that may not be saleable, and that often can't run without them. Worth finding out early.
Most owners' retirement plans rest on an asset nobody has valued, that may not be saleable, and that often can't run without them. Worth finding out early.
Ask an owner what they're worth and the business usually appears in the answer with a confident round number attached. Ask where the number came from and it's rarely anywhere.
That matters because for a lot of owners the business is the single biggest item in the plan — often larger than the pensions and the house together. If it's worth what they think, they're fine. If it's worth nothing, the plan fails. And nobody has checked which.
Every plan models the business twice: once at zero, once at your figure. The gap between those two answers is the honest measure of how much of your retirement rests on a sale. For plenty of owners that gap is most of the plan, and seeing it is the most useful thing the exercise does.
The one everybody pictures. Depends entirely on whether the business runs without you — a firm that is really one person with a company around them is a job, not an asset, and buyers know it.
Often more achievable, usually at a lower price, frequently paid over time out of future profits. That changes your plan considerably: it's an income stream with risk attached, not a lump sum.
Step back, keep ownership, take dividends. Works well for some businesses and not at all for others, and depends on somebody competent running it who isn't you.
The unglamorous ending, and more common than anyone admits. Extract what's there, close it, walk away. Worth modelling honestly, because it's the floor.
Not the thing most owners think. Turnover and even profit matter less than whether it survives your absence.
The single biggest factor. If the relationships, the quoting and the decisions all live in your head, a buyer isn't purchasing a business — they're purchasing your obligation to keep turning up.
Contracts, retainers and recurring work are worth far more per pound than one-off jobs, because the buyer can see next year.
Accounts a buyer can believe without a forensic exercise. This is where being an accounting client actually pays — a business with three years of tidy, consistent numbers is materially easier to sell.
One customer at 60% of turnover, or one supplier, or one person who knows the system. Each one reduces the price or kills the sale.
Making a business saleable takes two to three years. If you want to stop at 62 and it's 60 now, the window for changing anything has largely closed. This is the argument for modelling it at 50 rather than 60.
A business sale isn't just a number to add on. It changes the shape of the plan in three ways.
Sales fall through, take longer than expected, or complete in a bad year. A plan that needs the money at 61 exactly is fragile in a way a pension isn't.
How you extract value from a company at the end has significant tax consequences, and the numbers involved are usually large. This is properly your accountant's territory and it belongs in the plan.
Money paid over three or five years out of future profits carries the risk that the profits don't appear. It should be modelled as what it is, not as cash on day one.
Stopping usually cuts spending too — the car, the travel, the things the business was quietly paying for. Worth modelling honestly rather than assuming the same outgoings forever.
Get it valued by somebody who does it for a living, and do it earlier than feels necessary. It is a few hundred pounds against a number that might be half your retirement plan. In the meantime, model it at zero and see whether the plan still works — that answer alone is worth knowing.
For a lot of owners it is in practice, and that is a concentrated bet on a single illiquid asset in one industry. It is not automatically wrong, but it deserves to be a decision rather than a default. The projection makes the concentration visible, which is usually the first time anybody has seen it laid out.
That is a genuine question with real tax consequences, and where it turns into which pension and how much, it becomes regulated advice we are not authorised to give. What we can do is model both routes side by side so you can see the difference in your own numbers before anybody recommends anything. The tax side is a conversation for your accountant.
Then the honest plan is the wind-down version, and it is far better to know that at 52 than at 62. Plenty of perfectly good businesses provide an excellent living and no exit value at all — that is not a failure, but it does mean the retirement has to be funded another way.
It covers what a sale at various values does to your position, and when you would need it. The mechanics of selling — the valuation, the deal structure, the tax — are your accountant's and your solicitor's work. We make sure the retirement plan around it is real.