Succession
Who Will Follow You Into The Business?
The day will come when you want to, or have to, leave your business. To make the transition to the next owner as smooth as possible, and to get the maximum return for yourself, you need to start planning now. These are just some of the benefits you will derive from early succession planning:
- The business survives the change in ownership/management and continues on as a profitable entity
- You will identify and address family or shareholder issues before they become disagreements and a threat to the business’ continuity
- You can minimise tax liabilities and maximise return
- It will ensure an orderly transfer of control and competencies
- The business and future leadership will be ready for the transition
The earlier you start your planning the more exit options available to you. You can, for instance, designate a successor and begin developing their skills to take over when you’re ready to leave. Your successor may need to arrange additional financial resources or develop their experience in a certain area before being prepared to take over the business and it could be a matter of years before they acquire these.
First you have to decide what you want to do. Will you sell the business, hand it over to a family member, leave/sell it to an employee, or sell it to the highest bidder? Your decision will be based on a number of factors that include your family situation and the type of business you own.
Many owners have found it can be a mistake to assume that just because the next generation is working in the business now, that they will automatically become the owners and/or managers of the business in the future. They may simply not be interested in taking over the role and would prefer to have the business sold as a going concern. They also might not have the ability to run the business.