As a business owner, have you given any consideration to your succession plan?
It is important to note that a succession plan is not the same as an exit plan, but rather an element within an exit plan. Succession planning is focused on the interests of the business when an owner departs and another takes over. Exit planning is focused on the interests of the business owner, with succession just being one aspect in the overall plan.
It is actually quite common for small business owners to not have a succession plan, or even an exit plan, in place. Regardless of whether you have no plans of retiring anytime soon, the future is unpredictable, and having a solid, documented strategy in place can be crucial to the health and fate of your business. You will want to be ready for any scenario or opportunity that comes along.
A succession plan is important for several reasons.
- It ensures that your management team is aligned with your plans and goals for the future of the company.
- It compels you to consider what parts of your business may need special attention for your plan to be effective.
- It keeps you focused on a long-term, bigger-picture vision for the business.
- It protects the business in the event of a sudden major life-changing event.
During the succession planning process, you will need to identify successors within the business and give them the opportunity to develop their skills and experience in order to replace you in the future.
Maybe you have been anticipating that one of your employees will buy out your business. If this is the case, you will want to make sure they have the financial capacity to give you the value that you are owed for your business, not to mention the skills to sustain its success. You could be put at high financial risk if the business struggles while you await your payout. You will want to ensure it is in the right hands.
If your company is family owned and operated, it is important that you consider your succession plan without making assumptions. Talk to your family members to determine whether they are even interested in taking over the business. Another factor to consider is whether your family member has the capability to effectively run the company. You may love them, but a CEO requires certain qualities and leadership skills. If you start planning your succession sooner rather than later, you have more time to help them hone the skills and knowledge they will need to take over.
If you are in a position where you do not have a qualified candidate to take over in a succession plan, then you may need to craft a broader exit plan that enlists a third party to purchase the business. Looking for a qualified third-party buyer can be tough to navigate on your own, and you want to make sure you find a buyer that is a good fit for your business and meets your financial needs. You will want to make sure that you find a buyer who values your business the way you do and will continue its legacy when you are no longer there.
Time to Make a Plan?
Contact us at Benchmark International to begin your succession or exit planning process. We have the expertise, global connections and digital tools to help you craft your dream exit.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkCorporate.com
Europe: Carl Settle at +44 (0)161 359 4400 / Settle@BenchmarkCorporate.com
Africa: Anthony McCardle at +2721 300 2055 / McCardle@BenchmarkCorporate.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $5B across 30 industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 13 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.