Have you thought about Succession Planning and Exiting your business?
There are various points in the year where we look to the future and think about our plans going forward. For older business owners, that may include deciding when to retire, and how many more years to work in your business.
We spend many hours with financial advisers, looking at how best to save for our retirement, building a pension, deciding upon investments and returns. Yet the biggest asset for many of us is our business, and the time spent ensuring we maximise that value is often lost, in amongst the day to day running of the company. Years go by, and we assume we are increasing our business’ worth all the time, but just how valuable is your business and how will you practically achieve that when you exit?
5 points to consider when Succession Planning:
- How are you going to exit? If you are selling the business, who to? Is there a trade buyer who is already showing interest, or is there sufficient merger activity in your sector for you to assess if your business meets an acquirer’s typical parameters? Have you got anyone to sell to in your trade or should you be considering an internal buyer, maybe someone who already works for the business, or a candidate you may have to yet identify and recruit? The more potential buyers you have, the more chance you have of maximising the chance of selling your business for the value that you believe it is worth.
- When are you going to exit? This will of course be a personal choice, but you should also have an eye on the landscape in your sector. Is there consolidation activity already? If so, don’t miss the boat! Once a purchaser has made a few acquisitions, they won’t be able to handle any more whilst they integrate and settle their new group. Is there competition from overseas on the horizon or are there new products and technological advances in your market which could affect your valuation in a few years? Would it be preferable to sell earlier rather than later? Carry out some research and ensure you have facts, rather than just gut feel.
- What does your business look like to a potential purchaser? Is it a risky proposition, or is it a well-oiled machine that generates profits without any hassle, even without you being there. The more systems and efficiencies you can implement, the more it appears that the business can stand on its own two feet and will calm the concerns of a buyer.
- Can you be seen? If an overseas buyer, for example, was looking for a company in your sector, how would they find you? Ensuring a good web and social media presence, being a member of the trade bodies, winning awards or having positive mentions in the trade press, all contribute to your profile. Make sure you can be found!
- Make a plan and be organised. Once you have reviewed your business from the point of view of selling it, rather than running it, you may recognise that changes need to be made to ensure it can be attractive to as many potential buyers as possible, and achieve the highest post-tax value when you sell your shares. However, these changes don’t all need to be made at once, and a good corporate finance adviser can help you prioritise with a timescale for the project, enabling you to mould your business to your ideal purchaser.
- If you would like to find out more about succession plans and your pension planning read Succession Planning – let pensions help you!
Contact us to find out more
Contact us to book your unique 1-2-1 Exit Planning Workshop in the New Year. Please contact firstname.lastname@example.org for more information or call 01904 655202. Mark Grewer is the Corporate Finance Director for Hunter Gee Holroyd, who are part of the Corporate Finance Network
Don’t miss our Business Builder Forum event on Wednesday 21 February: Creating shareholder value: how to build a business that people want to buy.
If you would like help in turning your goals into financial plans, please contact Nick Lawson on 01904 655202 or email email@example.com