Exit and Succession Planning
What do we mean by exit strategy or succession planning? Creating a successful business one thing, generating maximum value upon exit and leaving the business in a good condition are quite another. An exit strategy is the generic description of a plan that aims to extract an owner from a business. That sounds easy to arrange but it’s not. Succession family implies that ownership and/or leadership is going to be passed on within the existing group of owners or managers. Both situations are fraught with difficulties but with proper planning and support the risks can be minimised.
Beauty is in the Eye of the Beholder
Have you ever tried to sell a house and it hasn’t shifted? What caused the delay? Was the kitchen too old fashioned or the garden overgrown? Similar factors can affect the attractiveness of a business to a potential new owner. Is there a strong management team in place? Is the stock well managed? Are their contracts in place with major customers? Is the business profitable? These are the type of things that a potential owner will be thinking.
Preparing a Business for Exit
Where do we start? What are our priorities? How can we value the business? What is the best way to sell it? Is a market sale better than a management buy out? Answering these questions is critical, and time is a critical factor. Typically businesses take months or years to sell, and in addition, an unattractive business might take years to prepare for sale. Have you started early enough?
There’s a reason that so few family businesses pass successfully from one generation to the next, and that is primarily due to the difficulties involved in succession. Is there a family member working in the business who is equipped to lead the business? Do you need to bring in another family member? Is the management team strong enough to support them? Is the business too dependent on the current owner? What is the financial settlement for the other members of the family? Any plan dealing with succession needs to ensure that the operation of the business is unaffected, a financial settlement can be reached, and crucially, all family members are still talking to each other at the end of the process.
What Is The Answer
Business Doctors are experts in the planning required for exit and succession scenarios and we recommend starting early. Start off by conducting a Strategic Review of the business to establish its strengths, weaknesses, and potential. Then develop a detailed Implementation Plan to put in place those Actions needed to ensure that the people, finance, processes, and systems are in place needed to achieve the agreed strategy. Take advice and support from experts regarding the tax, finance, and legal implications. And most importantly communicate effectively with all the key stakeholders in your business, your family, and your bank.
Warning: Undefined variable $cat_slug in /www/businessdoctorsireland_388/public/wp-content/themes/business-doctors/single.php on line 208