Every entrepreneur has a different story – from business plans drawn up on the back of an envelope, to re-mortgaging homes to fund initial investments, to plans to build a legacy that will last.
Early ambitions tend to be clearcut, but when the time comes to sell their business, many entrepreneurs find themselves unsure what success truly looks like. Have I achieved what I planned to? What will I do next? And will I have sufficient cash flow to fund my lifestyle and ensure my family is provided for?
Often, myriad concerns boil down to one, simple question – “What’s your number?”
For an entrepreneur considering an exit, this is about more than just the business valuation – it’s about having a holistic understanding of how to manage wealth post-sale, the tax implications, and what they want their life to look like in five, ten, or even fifty years’ time.
At Lombard Odier, our long experience of serving entrepreneurs has taught us that “the number” must be defined holistically. There is no, one, right answer – instead there’s a series of moving parts, including timing, corporate goals and personal and family aspirations. To achieve a successful exit, these many facets must align.
Building confidence in your exit strategy
Planning your exit strategy starts with understanding the value of your business. Here, entrepreneurs must go beyond ballpark estimates or anecdotal comparisons – a comprehensive valuation takes into account numerous aspects of the business, including revenue stream, profitability, debt, customer retention, sector trends, competitive advantages, and the ownership of both tangible and intangible assets, such as intellectual property.
A high headline valuation may not translate into immediate wealth. Earn-outs, deferred payments, equity rollovers and retention clauses can all shape how much money reaches you and, crucially, when
Timing can play a determining role, especially when evaluating earnings multiples. A favourable market, a surge in sector demand, or improved financials can all shift the multiple significantly – on public markets, for example, software-as-a-service (SaaS) company valuation multiples hit 17x in 2020 at the height of the Covid pandemic, compared to just 7x at the end of 20241.
Some exits may be opportunistic, sparked by an unexpected offer or wider market sentiment, while others are meticulously planned. Planning in advance allows you to optimise operations, strengthen the company leadership team and streamline financial reporting, all of which could boost the achievable valuation. Forward planning also means exiting on your terms, not someone else’s.
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learn more Of equal importance is the deal structure. Many founders are surprised to learn that a high headline valuation may not translate into immediate wealth. Earn-outs, deferred payments, equity rollovers and retention clauses can all shape how much money reaches you and, crucially, when. Effective pre-sale tax structuring can also be crucial, not just in maximising post-sale capital but also in shaping a longer term succession planning strategy. It is critical that entrepreneurs understand the implications of the deal terms and negotiate to ensure they align with their liquidity needs and risk appetite.
At Lombard Odier, we work closely with corporate finance partners and tax and legal advisors to help entrepreneurs explore the short- and long-term implications of different deal scenarios. By simulating a range of structures, we can evaluate how each would affect the overall outcome, helping you feel more confident about your exit strategy.
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More than just a number – life after exit
The exit strategy is only half the story, however. Selling a business can be an emotional milestone, one that entrepreneurs often underestimate. That’s why the sale value must be more than just a number – it must take into account the life you want after the deal has closed.
Dylan Samuel, Senior Relationship Manager at Lombard Odier, explains: “Entrepreneurs tend to be very focussed on their business. They excel at operating in their field, but they can underestimate the change in circumstances when you move from being a business owner to being an asset manager.”
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learn more “I have seen some clients regret selling, though that’s the minority. Most of my clients have taken the business to where they wanted it to be, and now see it as a natural transition, freeing them up to focus on other areas of their life – whether it’s more time with their family, travelling, focussing on different projects, or potentially creating new businesses.”
At Lombard Odier, we advise clients to consider these things well in advance of a sale. Do you want to take a sabbatical, or immediately start your next venture? Do you have a new business project in mind and, if so, will you need start-up investment? The answers to these questions can dramatically impact the amount of capital you’ll need post-exit.
Next, is the matter of lifestyle and financial independence for the entrepreneur and their family – without careful planning, even a significant liquidity injection can be quickly eroded by taxes, inappropriate investment decisions, or unexpected life changes. It is essential that future outgoings – including the impact of inflation – are considered when deciding your number.
For many founders, ‘legacy’ will be a further important consideration, with their exit creating a chance to define what they leave behind. Whether that’s engaging in philanthropy or creating a family foundation, your number should incorporate the capital you need to ensure a legacy that lasts.
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Translating vision into structure
The process of defining your number is not linear. Often, the natural starting point is a vision – a vision of your business at your point of departure and of your life after exit.
At Lombard Odier, when working with entrepreneurs prior to a business sale we begin with questions that may, at first, feel far removed from the technicalities of a deal structure – such as ‘How do you define fulfilment?’ and ‘What does success look like for you?’
We then translate these answers into quantitative capital requirements, taking into account your current assets, the likely proceeds from a sale, and how much capital you would need to finance your lifestyle and plans, based on expected returns, drawdown rates, and longevity assumptions. Where there’s a mismatch, we revisit the exit strategy, exploring whether alternative deal terms might close the gap.
We also work through different business scenarios. What if, rather than planning to sell in three years’ time, you were to sell sooner and invest the capital? Or what if you were to take on an investor as a partner? By comparing pathways we can help choose the one that best leads to your desired destination, maximising both financial value and personal satisfaction.
For many founders, this process can highlight hidden challenges. Some are so focussed on their business that they quickly realise they aren’t ready for a sale – that they haven’t yet developed the interests or plans that will help them find fulfilment. It is important to identify and address these gaps early so that when the exit arrives it feels like a transition, not a void.
Through all the talk of cash flow and deal structures and portfolio allocations, however, it’s essential to remember that selling your business is about people – your business partners, your employees, your community and, ultimately, you, your family and your future
The start of a new chapter
Defining your number is one of the most important exercises an entrepreneur can undertake. It ensures that your exit is not a rushed, sudden reaction to external pressures, but a reflection of intention, a bridge from the business you’ve built to the future you desire.
At Lombard Odier, we bring the full breadth of expertise to this process. Our holistic, integrated approach brings together our wealth planners and investment strategists with your tax advisors and corporate finance experts so you can define your number with clarity and purpose, and create an exit strategy that aligns with your future plans.
As part of your team, we can support you through the sale process. But beyond this, we can help you start a new chapter in life by creating a wealth strategy fit for the future, that includes investment planning, cash flow modelling, risk management, and future-proofing your assets, targeting long-term stability and growth.
Through all the talk of cash flow and deal structures and portfolio allocations, however, it’s essential to remember that selling your business is about people – your business partners, your employees, your community and, ultimately, you, your family and your future.
As Dylan Samuel explains, “Wealth management, at its heart, is very emotionally engaged. If a business is sold, that change can be dramatic for a client. They need to find where they’re going to refocus, and they also have to acquire a new skillset when it comes to wealth management. They need to think about transition and passing wealth to their children, which is always an emotive topic.”
“And they need to think about what purpose it gives them, what they want their wealth to deliver, and their passions and projects, whether that’s legacy or philanthropy. Because ultimately, when your business journey ends on your terms, your next chapter will begin from a position of strength.”
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