Exit Strategies for Founders: Why February is the Perfect Time for Business Breakup This February, experts weigh in on the art of business breakups and how founders can exit on their own terms.

As February begins, entrepreneurs find themselves at a pivotal moment - just as Valentine's Day sparks reflection in personal relationships, this month calls for business owners to evaluate their next steps. Whether it's planning an exit, seeking a merger, or rethinking strategy, it's a crucial time to assess where their business is headed.

Whether contemplating a sale, a merger, or a handover, the prospect of exiting a business requires careful deliberation and strategic planning. Just as Valentine's Day encourages individuals to reconsider the paths of their personal connections, February serves as a moment for business founders to take stock and decide what comes next for the companies they've built.

In this Entrepreneur UK feature, we dive into expert insights on how UK-based founders can navigate the emotional and practical aspects of business exits, ensuring a smooth transition into whatever comes next. For entrepreneurs in the UK, deciding when and how to exit their business is a critical decision, with far-reaching implications for both their professional and personal lives. While much of the focus tends to be on the financial aspects of exit strategies, one crucial component often goes unaddressed: the emotional impact on founders. Simon Daniels, Director at KBS Corporate, highlights that this emotional side is frequently overlooked but plays a key role in the exit process.

"Building a business from scratch and ultimately deciding to sell it is naturally a very emotive experience for any entrepreneur," said Daniels. "The blood, sweat and tears, and, of course, money invested into making the company a success means that cutting ties with it becomes one of the most important decisions a business owner will make during their working life. Coupled with the founder will have emotional connections to some of their longer-standing employees."

Daniels explains that the emotional impact of selling a business can be lessened if the exit is managed carefully, offering a smoother transition for the founder. "But we always advise a client that their exit doesn't have to be as stark as simply handing over the keys and walking away. For example, the emotional impact can be lessened if the exit is phased – perhaps they would be suited by a private equity investment where the entrepreneur remains involved for the next few years under new ownership."

To ease this emotional transition, Daniels suggests that founders should negotiate deal structures that allow them to remain involved in a handover capacity, which ensures both the company and its employees are well cared for during the transition. "Founders shouldn't forget about negotiating deal structures which enable a business owner to remain in a handover capacity to ensure a smooth transition for the company and its staff, while allowing the existing shareholder to ease away gradually so that when they eventually part with the business they founded, it feels seamless and less emotional."

Lewis Crompton, CEO and founder at STARTrading, who accepted a merger option last year instead of a full sale, sheds light on this key distinction. Though he has yet to sell his company outright, Crompton offers valuable insight on considering the level of exit that best suits your goals.

"Decide what level of exit you want. Not all exits are created equal," Crompton advises. "What are you truly looking for and will a 100% exit give you that? What about a 50% or a 75% exit, which allows support to come in and the majority of the stress to be someone else's? Do you want true partnership 50/50 or are you happy with less ownership, less responsibility but still having a hand and a say in how the company is run. Do you want to formally maintain control and decision making powers by keeping at least 51% of the company for yourself."

For Crompton, a partial exit can provide a balance between gaining support and relinquishing full control while also reducing some of the pressures associated with running a business. In his case, the merger option allowed him to remain involved, but with a reduced role, thus relieving some of the burdens while still benefiting from the company's ongoing success.

Trying to be non-emotional about what you do with your business is key to finding the best outcome. "Don't let the stress and heartache lead to a rash decision but also don't let the years of love and attention cause you to hold on to something that no longer serves you as it once did. After all, you have been serving the business to get it to this stage and you should be proud of that. Time to get excited about the next step!," he advises.

A further layer of insight comes from Jessica DeLuca, founder and former CEO & Chairwoman of Cult Beauty, who successfully exited her business to THG. DeLuca advises that one key to a successful exit is to manage or eliminate the need for an earn-out period through robust succession planning and systematic documentation.

"I advise managing or eliminating the need for an earn-out period through robust succession planning and systematic documentation," DeLuca suggests. "Instead of finding yourself working as an employee in your own company post-sale, focus on creating a business that can thrive without you."

DeLuca stresses that founders should work on creating a business that operates independently, which not only boosts its value but also provides the flexibility for a smoother and more advantageous exit. "Start by developing comprehensive operations manuals and a crystal-clear company vision that empowers your team to make decisions aligned with the business's goals."

She also highlights the importance of cultivating a strong successor, someone who can take over leadership responsibilities before the transaction is finalized. "Also, cultivate a strong successor—either by mentoring a deputy who can confidently run operations before the transaction or by stepping back into a chairperson or board role while allowing your successor to demonstrate their leadership."

The ultimate goal, according to DeLuca, is to ensure the business is valuable because it operates independently of the founder, not because it relies on them. "The key is to create a business that's valuable because it operates independently of you, not because it relies on you. This approach can also increase the company's value and provide greater flexibility in exit timing, enabling you to negotiate from a position of strength rather than necessity."

Miles Kean, director of Private Banking at Arbuthnot Latham cites exiting a business is one of the most significant decisions an entrepreneur can make.

"The triggers for exit are varied - from personal motivations such as desiring a new challenge or feeling you've achieved your key goals, to external factors such as market dynamics or tax policies influencing this decision", he says. Recognising these motivations early on can help an entrepreneur to shape a clear exit strategy that aligns with both their personal and professional aspirations.

"In our experience, business owners who start planning early – and focus on aligning their goals with their exit plans – are better positioned to navigate both the emotional and logistical challenges that often arise. A well-thought-out plan can also ensure a smoother due diligence process, which can otherwise become an intense and taxing phase," he warns. He advises to work closely with trusted wealth advisers and build a strong support team that can help manage this crucial stage. He warns that even with the right preparations, the emotional toll of letting go – such as the loss of identity or purpose – can be significant.

"By focusing on both the financial and personal aspects of the exit, entrepreneurs can ensure that their post-exit life offers new opportunities to redefine success, whether through pursuing new ventures, spending more time with family, or taking on advisory roles. The key to a successful exit lies in clear and early planning and addressing the full spectrum of both practical and emotional considerations."

Rowan Manning, CEO at ScarlettAbbott, also provides a compelling take on the importance of thorough preparation in any exit strategy. Manning notes that the motivation behind an exit is as unique as the founder, influenced by a mix of personal goals and the business's market position. Regardless of the approach—be it through acquisition, IPO, or succession—great planning is essential to ensure a successful transition.

"While the motivation behind a business exit is likely to be as unique as its founder – and depend on a combination of personal goals and the business's structure, market position, and long-term vision – the main unifying element in all successful business exit strategy is great planning," Manning explains. "Whether the best avenue is to be through acquisition, IPO, or succession, preparation is key. There are plenty of lesson-rich examples out there, from Sergey Brin and Larry Page successfully transitioning Google into Alphabet, to WeWork's infamous IPO collapse under Adam Neumann."

Manning advises that an exit strategy should begin at least 6-12 months ahead of time to allow sufficient time to refine the approach, engage with external advisors, and complete due diligence. "An exit strategy should begin at least 6-12 months ahead of time. This allows founders to refine their approach, engage with external advisors and complete all necessary due diligence. Any well-developed business exit strategy should deliver a compelling narrative outlining both the steps required to safeguard the owner's smooth exit and ultimately a clear path to transition the business to an exciting new phase."

Manning stresses the importance of seeing the business from a buyer's perspective and preparing all aspects of the business for a potential transaction. "Founders should ensure they view their business with a cold eye, and through the lens of a potential buyer. Identify the businesses differentiators and key selling points. Invest in external support to get your house in order. Ensure financial reporting, legal compliance and operational systems are watertight."

She also points out that one of the biggest obstacles in the exit process can be the owner themselves. "Ironically one of the most common stumbling blocks can be the owner themselves, often failing to adequately prepare for the transfer of leadership responsibilities," Manning says. "Build out clear roles and shine a light on your management team, step back from the day-to-day operations, and demonstrate to potential buyers that the business can thrive independently."

Finally, Manning adds that a great exit is not simply about leaving; it's about ensuring the business continues to thrive after the founder has stepped away. "A great exit isn't just about leaving, it's about leaving the business in a position to flourish without you."

Victoria Ansell, managing partner at Marktlink, Europe's largest independent M&A advisory firm, also brings a strong emphasis on the holistic approach to business sales. Ansell believes that successful exits are rooted in comprehensive preparation that goes beyond just financial documentation.

"In the complex world of business sales, preparation is everything. It's not just about financial records, but a holistic approach encompassing organisational readiness, performance optimisation, and personal strategy," says Ansell.

She also stresses that selling a business is not a one-time event, but a carefully orchestrated process. "Successful business owners understand that selling isn't a moment, but a carefully planned journey. This means ensuring every aspect of the business is polished and compelling—from operational systems to financial documentation. Performance matters—potential buyers aren't just purchasing current revenue or profits, but future potential."

Ansell adds that the human element, such as having a prepared management team and emotional readiness for the transition, plays a crucial role in ensuring a successful sale. "The human element is equally crucial. A prepared management team, an emotionally intelligent approach, and family support can significantly influence transaction success. Entrepreneurs must consider not just the sale itself, but what comes after—personal financial planning, lifestyle transitions, and emotional readiness to move on."

She concludes by pointing out the importance of professional advisers in navigating the complexities of an exit. "Professional advisers become key navigators in this process, helping transform raw business potential into an attractive, strategic proposition. They guide owners through the intricate landscape of due diligence, financial implications, and strategic positioning."

Ansell believes that a successful business sale is more than just a transaction—it's a transition that honours the founder's legacy while also opening up new opportunities. "Ultimately, a successful business sale is more than a transaction—it's a meticulously choreographed transition that respects an entrepreneur's legacy while creating opportunities for exciting new chapters."

Simon Daniels' Tips for Managing the Emotional Side of Exiting a Business:

Plan your exit thoroughly: "Start by formulating a clear idea of your objectives—what are you looking to achieve?"

Be flexible with timescales: "This increases your chances of achieving the highest possible value for your company, as well as the right deal for you."

Consider all types of deal structure: "Explore different options that may align with your long-term goals."

Be certain the new owner is the right fit for your company: "The emotional impact of the sale will be reduced if you know your staff will be in good hands going forward."

Maintain full focus on running your company: "By taking your eye off the ball, a downturn in performance could complicate any agreed terms or structures, putting the transaction at risk. Another important aspect of exits is recognizing that not all exits are the same."