The exit phase of any investment determines whether years of effort translate into substantial returns or painful losses. Yet while diaspora investors dedicate considerable attention to entering the Nigerian market, most approach exits with inadequate planning and preparation.
This oversight proves costly: research and market observations suggest that investors routinely sacrifice 30 to 60 per cent of their potential exit value through preventable errors.
In this article, we highlight four critical mistakes that can mean the difference between a successful exit that preserves wealth and a problematic one that destroys value built over the years.
1. Treating CCI As Optional
The Certificate of Capital Importation (CCI) represents the single greatest blind spot in Nigerian investment. Most diaspora investors discover the importance only when trying to exit, by which point the damage is done.
Here’s what happens in practice: you wire money to Nigeria, your local partner or accountant confirms receipt, and you begin operations. The bank that received your funds should issue a CCI within 48 hours; however, unless you specifically request it, many banks don’t.
Years later, when you want to repatriate sale proceeds or dividends, the Central Bank of Nigeria asks for your CCI. Without it, your money is effectively trapped.
The regularisation process exists, but it’s expensive and uncertain. You’ll need to reconstruct evidence of the original forex transaction, engage specialised banking lawyers, and hope the CBN accepts your documentation. Some investors spend six to eighteen months and significant legal fees attempting regularisation, with no guarantee of success. Others abandon the formal repatriation route entirely, losing money to parallel market rates or informal transfer channels that can extract 15 to 25 per cent in costs.
The solution is simple but non-negotiable: obtain your CCI within one week of capital importation. If you’ve already invested without one, engage banking and legal advisors immediately to regularise your position before discussing any exit. Every month you delay reduces your options and increases eventual costs.
2. Assuming Family Loyalty Equals Business Competence
Nigerian culture places enormous emphasis on family obligations, and many diaspora investors automatically assume their business should pass to relatives. This emotional decision, made without objective assessment, destroys businesses and fractures families with remarkable consistency.
The tragedy deepens because these failures were predictable. Research indicates that only 30 per cent of family businesses survive into the second generation globally, and in Nigeria, the vast majority of entrepreneurs lack formal succession plans.
The Nigerian context adds complexity: multiple wives, competing children, extended family expectations, and cultural prohibitions against openly assessing family members’ capabilities.
Consider the alternative approach: identify potential successors early, whether family or professional management, and subject them to objective evaluation. Can they manage people effectively? Do they understand the business fundamentals? Have they demonstrated financial discipline? Do customers and employees respect them? These questions feel uncomfortable, but matter infinitely more than genetic connection.
If family members show genuine capability, excellent. Invest years in structured development through formal training, mentorship, and progressive responsibility. Establish clear performance metrics and governance structures that include non-family oversight. Create a shareholders’ agreement that addresses potential conflicts before they arise.
If family members lack capability or interest, acknowledge this reality without guilt. Sell to a third party, arrange a management buyout, or establish professional management with family members as passive shareholders. Trying to force an incompetent family member into leadership destroys both the business and family relationships, leaving everyone worse off.
The most successful family transitions separate ownership from management. Family members may own shares and receive dividends, but day-to-day operations rest with competent professionals, whether family or not. This structure preserves both business value and family harmony.
3. Emotional Valuation And Timing
Founders consistently overvalue their businesses by 40 to 100 per cent because they confuse effort with value. You spent twelve years building this company, sacrificed weekends, missed family events, and survived multiple near-death business moments. Surely that struggle has worth beyond mere financial metrics.
Well, the market disagrees. Buyers pay for future cash flows and transferable assets, not for your historical struggle. They view businesses through cold financial analysis: what profits can this generate with professional management, what risks exist, and what alternatives are available for deploying capital.
When founders receive professional valuations significantly below their internal expectations, they typically respond in one of two destructive ways. Some reject market reality entirely, insisting that buyers simply don’t understand the business potential. They hold out for their target price, sometimes for years, while the business slowly declines and becomes less attractive. Others take offence at low offers and decide to simply “hold on a bit longer” until market conditions improve or the business hits certain milestones. This delay often proves fatal.
Timing exits for perfect conditions represents another emotional trap. Markets shift, regulations change, key employees depart, or personal health issues emerge. The longer you wait for ideal circumstances, the more likely you are to exit during a crisis when options contract and values collapse. Emergency exits destroy 30 to 50 per cent of value as buyers sense desperation and adjust their offers accordingly.
The professional approach requires emotional discipline. Obtain an independent valuation from qualified M&A advisors or business appraisers early in the exit process, before emotional attachment clouds judgment. Accept that market value reflects what willing buyers will actually pay, not what you believe the business deserves. If the valuation disappoints, you have two options: accept the current market reality or invest specific resources to address the identified value gaps before re-entering the market.
Build exit optionality into your business from inception rather than waiting until you need to leave. This means maintaining clean financial records, diversifying away from founder dependency, documenting processes, and preserving compliance with tax and regulatory requirements.
Businesses that can operate without the founder command premiums of 25 to 50 per cent over founder-dependent operations.
4. Do-It-Yourself Exit Trap
The final fatal mistake emerges from cost consciousness taken to self-destructive extremes. Having built a business through personal effort and financial discipline, many founders attempt to manage exits themselves or with only minimal professional support. They view lawyers, accountants, and M&A advisors as unnecessary expenses rather than value multipliers.
This calculation reverses cause and effect. Professional advisors don’t cost money on exits; they generate returns.
Consider what competent professionals bring to exits: lawyers identify and resolve legal issues before they become deal killers, structure transactions to minimise tax exposure, and draft agreements that protect you from post-closing liabilities. Accountants prepare audited financials that buyers trust, identify and rectify compliance gaps, and model tax implications of various exit structures. M&A advisors access buyer networks, manage competitive bidding, structure creative deal terms, and serve as negotiation buffers that preserve relationships while maximising value.
The Do-It-Yourself approach sacrifices all these advantages to save professional fees, then loses multiples of those fees through poor deal terms, missed opportunities, legal exposure, or failed transactions. Founders negotiating alone face experienced buyers and their advisors, creating asymmetric negotiation dynamics that inevitably favour the better-equipped party.
The scope of exit complexity demands professional support. Between corporate law, tax optimisation, forex repatriation, regulatory compliance, and commercial negotiation, exits involve specialised knowledge that founders cannot reasonably master. Attempting to do so represents false economy that routinely costs far more than it saves.
Action Steps
These four mistakes share a common origin: treating exits as afterthoughts rather than integral business strategy. The most successful diaspora investors plan exits from day one, building businesses designed for eventual transfer rather than permanent founder dependence.
Don’t know where to start? Book a free consultation today with Mr Ted Iwere today!
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