Exit planning is all about timing. There are several actions you can take to maximise the value of your business, facilitate a smooth transaction and ensure its ongoing success.
A business primed for sale can be worth considerably more than one where the owners have neglected to plan ahead.
If you are expecting your business to fund a new business venture, or your retirement, consider that it takes on average more than three years to prepare a business for sale, or to reach a position where your day-to-day involvement can be substantially reduced.
There are generally seven stages of business succession:
1 ) Survival
Once the business has survived the start-up stage, the founder should begin giving consideration to succession, regardless of his or her age.
2 ) Commitment
The founder must commit to the concept that the business has to continue in order to create opportunity for those to come. This commitment must be communicated extensively and often.
3 ) Recruitment
The organisation cannot survive unless it is staffed with the best people. Recruiting good people will always pay dividends and is a key item in succession planning.
4 ) Development
Investing time in developing your family members and other management team members and allowing them to exercise authority and control is key to a successful transition.
5 ) Selection
Having developed a successful transition plan and recruited the right people, selecting a successor or successors becomes easier. By empowering a broad range of key people, the selection process is simplified and options are enhanced.
6 ) Announcement
Having come this far, it is time for the founder to announce his or her future plans. This gives key management people and family successors a clear path to the future and a definite goal.
7 ) Implementation
In implementing the succession plan, the founder must be ready to step aside and allow his or her successors to take over. The founder needs to be prepared to take on new challenges in retirement knowing that his or her financial future is secure.
Efficient structuring in advance can potentially reduce the tax burdens on both the seller and the purchaser. Where a succession is intended, the inheritance tax position may also be important. Tax planning can take a long time to put in place, so the sooner a tax adviser is brought in the better.
Work with us to ensure you have a clear idea of where your business needs to be when you exit, where you are currently and what you need to do to bridge that gap.
Contact Seamus Gates to discuss any areas that we can assist you in planning your succession.
Tags: exit planning, Succession