Despite the excitement surrounding the legendary food culture in Singapore, the fierce competition and other challenges facing the food and beverage industry today cannot be ruled out. No one can anticipate an impending disaster in advance, but you are often given clues about yourself. It is your responsibility to be aware of these signs and pick an exit strategy that synchronises with your personal and F&B business goals. Here are the most used strategies.
Pass it on:
The first exit strategy for F&B business is simply the transfer of ownership to the next generation. When you entrust your work to your family, the main advantage is continuity. Strangers shouldn’t be involved – you can transfer your job to someone you trust and see it as part of your family for the next generation. If running a family F&B business interests them, it’s also a great way to protect your child’s future.
Employee management or purchase:
One of the best exit strategies for F&B business could be to sell it to the people who are already associated with it, such as an existing group of managers or employees. They can pool their money and buy deals from you. Purchases by management and employees are also highly continuous. These people know everything about F&B business operations and functions and have the competencies to successfully maintain them.
Commercial Sale:
The most common exit strategy for entrepreneurs is to sell restaurant in Singapore to another person or company. This includes transactions that can be conducted between private parties without any government regulation and oversight that may occur in an initial public offering. The sale usually involves the salesperson of the company receiving money in exchange for the company. The difficult part of selling is evaluating the company. Most small F&B businesses are privately owned, so the final transaction price at the time of sale may be an art rather than a science. Make sure you have multiple reviews of the company so you can be sure the price is right.
Merger:
A merger occurs when two companies combine to determine the value of each company and combine them to form a larger company. In most mergers, the shareholders of the company receive the shares. Please note that a consolidator will not be able to receive money for some time.
Takeover:
Another way to get money is to get a purchase from someone who will takeover a restaurant. Keep in mind that this agreement takes into account the company’s performance at the time of purchase and after the company leaves. In general, better business takeover deals are achieved if the acquiring company can pay upfront rather than making a “leveraged purchase” in which the acquiring company uses the company’s future cash to pay off its debts.
Liquidation of assets:
If you are in debt, you can also close your F&B business and sell your assets to earn cash. Obviously, you need to find a buyer who feels the asset is worth it. Also, for assets where the value of the asset is not clearly defined, a fair price must be negotiated. This type of exit strategy usually sells less money because it only sells total assets.
Conclusion
Whether you’re interested in starting with money or checking for F&B business continuity, planning your exit early gives you the opportunity to do it right and maximise your profits.
