When the time comes to exit for a new business venture or a well-earned retirement, succession planning can be something of an afterthought. In practice, a lack of investment in succession planning can reduce your options and potentially the return from years of hard work. For your business, the immediate loss of talent and expertise can have a detrimental impact without effective planning.
It is, therefore, advisable to begin considering your business succession plan well before you decide to sell.
Succession planning: the options
As a business owner, developing a succession plan opens up a broad range of available options. Depending upon the ownership structure of your company, they are typically:
- Management buy-out (MBO)
- Employee Ownership
- Transfer of ownership within your family
- Trade sale
- Sale to another shareholder/business partner.
The option you select will depend on a number of factors, including:
- Desired profit extraction from the business (e.g. a lump sum or profit share)
- The legacy you wish to leave (e.g. protections for loyal employees, brand name)
- Existing management structure (e.g. is an MBO a viable option?)
- Your preferred role within the new ownership structure (e.g. retained as an adviser or leaving the business completely?)
- Lower limits on the price you are willing to accept.
Succession planning: choosing the right adviser
With such a complex and wide-ranging list of considerations, it is essential to get trusted advice and wise counsel from experienced succession planners. Consilium Chartered Accountants build an in-depth profile of you and your business, to ensure your succession plan and exit strategy meet your personal and commercial goals.
Learn more about Succession planning services from Consilium Chartered Accountants and the key issues to consider when selling your business.