LWA Blog: Director exit planning, and ensuring business success

When a director exits from a business, it can feel like a watershed moment – whether you’re the one stepping back or you’re helping a fellow director transition out. For many owner-directors, the idea of stepping away from the company they’ve shaped over years can be both exciting and daunting. But with the right planning, the business can continue to grow, protect its value, and reassure everyone involved.

Recent high-profile examples, such as Spotify founder Daniel Ek announcing he is stepping aside from day-to-day leadership, remind us that transitions work best when they’re approached early and thoughtfully. While most UK businesses operate on a far smaller scale, the lessons are much the same.

This topic is a specialist area of expertise for our very own Director, Les Leavitt, and in his latest blog below, he shares some practical steps to help you prepare your business for success long before any director hands over the reins.

Who should lead a business after a director exit?

A smooth director exit from a business relies on confidence in the people taking over. Staff, customers, suppliers, and investors all want to know that the business will stay on track.

For SMEs, this usually means identifying one or two people who can take on more responsibility gradually. Giving managers the room to make decisions (with your guidance still available) helps embed resilience into the structure of the business.

It’s also worth reviewing employment contracts and director service agreements to ensure roles and responsibilities are lined up with the planned transition.

Can I stay in the company if I step down as director?

Stepping back doesn’t have to mean selling up. Under English company law, it’s perfectly normal for a shareholder to step away from operational duties while retaining ownership and strategic influence.

Many directors choose to:

• stay on the board as a non-executive
• keep their shares while delegating management
• pass leadership to a managing director or senior team

This approach can protect continuity and maintain confidence in the business. If you keep your shares, it’s important to review shareholders’ agreements and governance documents so your role is accurately reflected after you exit.

Share your knowledge and expertise before you step back

One common challenge when a director exits from a business is that too much knowledge sits with one person. If key information, decision-making, and client relationships live mostly in your head, succession becomes far more difficult.

Useful steps to undertake to ensure a smooth transition include:

• writing up standard operating procedures
• reviewing customer and supplier contracts
• ensuring financial systems are well-organised and accessible
• improving record-keeping and compliance processes.

Here’s a great YouTube Short from Action Coach founder Brad Sugars on creating successful systems: https://youtu.be/23toUXM2Vtc

Rethink your role in the months before exiting

Whilst many business owners might use the Christmas break to reflect on the idea to exit their business, a director exit isn’t an overnight event. The transition period is a chance to shift your focus to strategic work rather than daily operations. Ask yourself the following questions:

• What genuinely needs my input?
• What tasks could I start stepping away from now?
• Who needs training or support to take over key responsibilities?

Reducing your operational involvement early helps others adjust, and it allows you to focus on planning, mentoring, and shaping the long-term direction of the business.

Communicate your exit decision clearly with staff and customers

When a director steps away from a business, it can prompt understandable nerves. Employees may worry about job security or changes in direction, and customers may question whether their service will stay the same. A clear narrative communicated effectively can help enormously. Here are some tips:

• explain the transition in simple, honest terms
• show confidence in your leadership team
• reassure people that systems and service levels remain unchanged
• Handled well, this communication builds trust rather than uncertainty.

Legal and financial experts should be involved in a director exit

A director exit from a business usually links closely to wider succession planning. In many cases, this includes

• updating articles of association or shareholders’ agreements
• reviewing director indemnities and insurance
• considering personal tax and inheritance tax implications
• planning for a sale, management buy-out, or family succession
• ensuring business continuity plans are up to date.

Getting these foundations right protects both the company and the interests of any exiting director. At LWA, we have supported many business owners with succession planning, director exits and management buy outs (MBOs) as well as supporting clients with links to our legal contacts. Take a look at our recent case study on the MBO we supported at Lakeland Laboratories: https://lwaltd.com/case-studies/lakeland-laboratories-ltd

Ready to explore stepping back in the new year? LWA can support your transition

The Christmas period often gives business owners the breathing space they need to step back, reflect, and think honestly about the future, including whether the coming year might be the right time to reduce their involvement or plan a director exit. Preparing early gives you more options, strengthens your business, and helps protect the value you’ve worked hard to build.

If you’re beginning to consider your own next steps, the LWA team is here to offer clear, practical guidance tailored to your long-term goals.

Get in touch with us on 0161 905 1801 in our Manchester office, or 01925 830 830 in Warrington, or you can email mail@lwaltd.com.

We’d be delighted to support you as you plan for a smooth, confident transition into the new year and beyond.