The idea of exiting can create feelings of anxiety, uncertainty and nostalgia which are completely natural for a business owner. These emotions can also, at times, cloud your judgment. Approaching exit planning with as much clarity and purpose as possible is essential and key to your long-term success.

Without correct planning and preparation, the emotional ties you have towards your gaming studio could see you make rushed decisions that don't align with your long-term business values or vision.

According to a previous article from Fsb, finding the right successor for your business will involve examining if their values align with your business values and if they have sufficient experience and knowledge within your industry.

Whether you are considering partial exits from your business through an MBO or EOT, be it for early retirement or to leave a family legacy, having an exit strategy in place allows you to secure the best long-term result for your gaming studio.

There are many steps within exit planning that include:

• Creating a realistic timeline of your business goals
  

• Finding suitable successors to maintain continuity of your studio: There are many options for business owners to consider other than selling, such as an EOT or an MBO. Both routes ensure you maintain sufficient control after you exit while securing the vision you created for your business.
  

• Setting up training programmes to help your staff prepare for their future roles.
  

Cementing an exit plan and the appropriate successor for your gaming business is vital, as this will ensure a smooth transition when exiting your company. Creating exit plans are necessary for all business owners to consider, even if you are not yet planning for retirement or looking for a new venture. By planning early on, you will help protect the financial and emotional investments you've made for your gaming studio.

As a gaming studio entrepreneur, your business consists of various creative work worth protecting especially during an exit plan. By creating a detailed plan, you'll be able to depart knowing your studio has benefited financially and the creative principles you've created for your business have been safeguarded under new leadership.

Valuation: Understanding the True Worth of Your Gaming Studio

In this gaming studio series, one of the most important steps you can make as part of your exit planning process is to determine your gaming studio's true value.

For many gaming studio owners, valuing their business can be a complex process filled with tangible assets. These can include various financial metrics such as revenue. Following what we stated in our previous two articles, operational costs and equipment are assessed beforehand.

But the real value of a gaming company, which holds a greater weight, is found within its intangible assets which we examine below:

• Intellectual property (IP): A gaming studio's IP can include unique designs, titles, technology, trademarks and copyright. These could potentially be worth millions and are often a studio's drive behind its value. Protecting your studio's IP can prevent others from exploiting your creative work and help you secure your IP rights - while avoiding legal disputes and a loss of control over projects. Having a strong, unique IP and being able to demonstrate your business' value and growth potential will attract investors within the gaming industry. This will help showcase your studio as a scalable model that can adapt to current and upcoming trends.
  

• The talent and skillset of your team: Another factor to consider is the skillset and creative talent that lies within your team, and how this has contributed to your gaming business. Recognising this can increase your studio's value, especially if you position it as the driving force behind the business' success with the ability to produce successful games within the industry.
  

• Your studio's market position within the gaming market: How you position your studio within the gaming market, particularly to investors, is crucial when it comes to valuating your business. Ensuring your studio has a strong reputation within the gaming sector, along with having a respectable and loyal brand, will allow you to attract higher valuations within a competitive industry.
  

Overlooking these intangible assets can result in valuations which don't fully reflect your studio's potential or true value. Therefore, making sure you collectively and accurately value them will present your studio with the opportunity of receiving a fair price.

As the gaming industry grows rapidly through collaborations with other sectors, gaming entrepreneurs need to understand recent trends and up-to-date UK-based valuation guides to achieve long-term success. This will allow you to have a realistic assessment of your business' worth, particularly as valuation metrics change from year to year.

The gaming sector has embraced cross-industry collaborations, including with the film and television industry, and a shift in how studios are valued is evident because of this trend. In an article that examines gaming trends, Canary references the successes of the 2023 film 'Super Mario Bro' and Netflix TV show 'The Witcher', both originally based on popular video games. As a result of both industries collaborating, the two productions have catered to fans of the original games and reached a new audience.

The long-term partnership between both industries presents many benefits, which help grow a gaming studios' value. These include reaching a wider audience within different markets, working with different technologies and working with other industry professionals with skills that help enhance the quality of games and films.

As a gaming studio owner, accessing current UK valuation guides will provide you with the necessary tools to make informed decisions for your business and set realistic expectations regarding valuation. According to an article from Ukie, the UK saw the video games consumer market value at £7.82 billion in 2023, a 4.4% increase from 2022. In addition, the revenues from film, TV, and soundtracks reached £124 million in 2023. This demonstrates the gaming industry's position within a competitive market, its ability to collaborate with other industries and how a gaming studio can attract potential investors.

Having the right balance when it comes to valuing your business correctly is crucial when creating an exit plan. While undervaluing your studio's worth could see you having to give up more equity and lose control of your creative assets, overvaluing your gaming studio could easily scare off potential investors and delay your business exit.

To avoid any pitfalls leading up to your exit, seek expert help from industry accountants and lawyers who will help you understand the stages of valuing your gaming studio, navigate any negotiation complexities and ensure you reach final investment deal that reflects your studio's true value.

Finding the Right Buyer: Protecting Your Studio's Legacy

As part of your exit plan, finding the right buyer for your gaming studio can be one of the most challenging parts - especially when the personal vision you have for your business is intertwined with your decision.

Your studio represents the entirety of your creative vision - including the goals you have for your business, ideas and your passion for the art of gaming - so naturally it represents more than just a financial asset. Selecting a buyer only because they are the highest bidder can present various issues down the line when it comes to compromising your studio's core values and legacy.

To preserve the creative vision of your studio, it's important to identify and select a buyer who offers you a fair financial deal and shows a genuine commitment to maintaining and growing your studio's legacy and creative direction.

The criteria to follow when choosing the right buyer includes:

• Assessing commitment to the studio's mission and long-term goals: This will require you to conduct an in-depth examination of a buyer's intentions, as well as their long-term plans for your studio's IP and creative team. By eliminating buyers who may change the direction of your business' legacy, and instead focus on buyers who share a commitment to maintaining your studio's creative vision, you can preserve your studio's growth and success.
  

• Conducting Due diligence on potential buyers: This is an essential step when creating an exit plan, as this safeguards your business from any potential issues. Due diligence will be able to examine a buyers' financial credentials and if they have a history of prioritising their financial intentions at the expense of a studio's long-term growth. If this is the case, then they may not be the best fit for your gaming studio. Through conducting due diligence, and reverse due diligence, you will be able to find the right buyer for your studio that will continue its legacy and creative vision respectfully and fairly.
  

By following this criteria when creating your exit plan, you will be able to find a buyer whose creative vision aligns with yours and whose passion for your gaming studio's creative and financial success will help to preserve your legacy.

Legal Considerations: Navigating the Complexities of Exit Deals

When it comes to exit planning, tackling the legal aspects can be seen as complex and a daunting experience for gaming studio owners - particularly for those who are unfamiliar with the ins and outs of business law.

Due to the creative nature of its work, a gaming studio will come across unique legal obstacles such as ensuring IP protection and maintaining control of creative projects. When it comes to exiting your business and accepting a fair deal, it's important to confront key legal elements that will determine the outcome of the sale. These include:

• Sales contracts
  

• Intellectual property rights transfers
  

• Non-compete agreements
  

• Employment contracts for key team members
  

It's important to stay up to date with current legal developments that can affect gaming studios in the UK. According to an article by Linklaters earlier this year, the rise of generative AI (particularly within online games) comes with many benefits and pitfalls. While AI serves the online gaming world with fantastic opportunities to enhance gaming experience and technology development, it also comes with risks and costs which urges business owners to legally protect their IP.

Doing everything you can to protect your studio's IP is key, as this will determine whether it is completely safeguarded and transfers correctly during a sale to help maintain control over your creation.

Additionally, putting into place well-structured and non-compete clauses can go a long way to help protect you from any potential competition that may arise from the sale. Seeking help from legal professionals, within the gaming sector, can help steer you through these steps and ensure that you reach a fair financial deal that aligns with your studio's creative vision and long-term goals.

Ensuring Financial Security: Planning for Life After Exit

Just like the sale of your gaming studio is important, securing your financial future is equally important and often gets overlooked by studio owners who focus more on the pre-sale of their business than post-sale.

Without careful financial planning and knowing what comes next, tax liabilities and other financial challenges can become an issue especially when managing the proceeds from a sale. As a gaming studio entrepreneur, putting in place a financial strategy to support your needs and long-term business goals is important. This may include the prospect of new ventures, planning for retirement or even plans to pursue personal projects.

The steps within this financial strategy consists of:

• Tax planning: When exiting your business, facing specific and complex tax laws is part of the process. It's important to collaborate with financial advisors who understand how these regulations work to help lessen any tax burdens you may face and help increase your financial return.
  

• Considering wealth management: The benefit of investing your money wisely can help you continue reaping the financial rewards from the sale of your studio, even after the completion of the sale. Whether you're planning to stay in the gaming industry through reinvestment or move into other markets, seeking help from a financial expert will help you get the most of your exit.
  

Exiting with Confidence and Integrity: Expert Advice from GS Verde Group

Creating an exit plan, and making long-term decisions based around your business exit, can be highly emotional as a gaming studio owner. But with the right planning and expert advice to help navigate you through the process, selling your gaming studio can be a rewarding experience. Finding the right buyer for your gaming business who shares your vision will help you enter the future with confidence while knowing that your studio has maintained its legacy, true financial value and creative vision.

As a leading provider of financial and legal services, GS Verde Group offers customised advice regarding business negotiations, valuation and investment deals to help your gaming studio plan effectively for the future. By planning your exit carefully and correctly, your gaming studio will you continue to function under the same long-term creative vision and goals.

At GS Verde Group, we specialise in helping gaming studio owners navigate the complexities of exit planning. Our tailored advice ensures that you are equipped with the knowledge and support needed to make informed decisions at every stage of the process. Whether you're just beginning to consider your exit or are ready to start negotiations, we are here to help you exit with confidence and integrity.