Successful Succession Planning: How to prepare your company for what’s to come
So, you’ve built a successful company, and you’re looking to retire in the coming years. What comes next for your business is a key question for companies of any size. In this post, we’ll talk about the finer points of succession planning, a vital step you should take in the years leading up to your retirement.
If you haven’t yet thought about succession planning, you’re not alone. According to PWC’s most recent Global Family Business Survey, 70% of business owners don’t have a succession plan. And 40% of business owners plan to retire in the next 10 years, lending some urgency to this topic!
We’re here to help. Consider the following action items to make sure you set your company and your family up for success in succession.
Look at your exit strategy options
While the most obvious transition for a family business may be to pass it on to a family member, this actually isn’t the most common outcome. When you’re looking at what comes next for your business, you have three main choices: sell it to an investor, sell it to a competitor, or pass it on to a family member.
What is your business valuation?
Each exit strategy scenario has the potential to impact the valuation of your business. For instance, being acquired by a competitor tends to give the highest valuation because the buyer understands the industry and the advantages they’ll gain from your business. Be sure that when establishing your business’s valuation, you look at a wide range of information and data points, including what’s going on in the market and the control premium.
Look at your business from the buyer’s perspective
As you prepare to sell your business, take a critical look at your systems, employees, and prospects so you can present them in a way that appeals to potential buyers.
Include all stakeholders in the plan
At the heart of any family-owned business is, well, family. Owners, and potential sellers, should make sure to have frank and open conversations with family members and stakeholders to get everyone on the same page with the succession plan.
Assemble your team of advisors
To prepare to execute your succession plan, you’ll need trusted advisors in a few key specialties, including an investment banker, an attorney with M&A experience, and a certified public accountant. You may determine that other experts are necessary for your field, as well.
The moral of the story is that you can’t just wait and see. To get the most value out of the business you’ve built, you must plan ahead and have open communication with stakeholders. If you’re not sure where to start or want to hear more from our team of experts at Symmetrical, give us a call!