Succeeding at Succession

A question frequently asked of us is the following one: “Is this a good time to sell a business?”  Our initial response is typically, “Why do you want to sell?”

The most common reasons given for selling include one or more of the following.

• It’s time I retire.
• I have health issues.
• I have marriage/family issues.
• I’m burned out and want to do something else.
• My business is struggling.
• There’s more to life, like travel, golf, spending time with family, etc., that I can’t do being tied down at my business.

Whatever your reason, before you take on the challenges of selling your company, we strongly recommend you have a good succession plan.  In other words, you must know how to effectively get out of your ownership position if unforeseen, unexpected matters arise.

Here are just a few things that should be addressed before you get to the point of putting your business on the market.

1. Protect yourself and your business from the three D’s: Death; Divorce; Disability.
2. If you have a partner, establish a firm way for you to exit.  Well before your departure, set out triggering events and a pre-determined price.  For the most effective assistance, work with a professional merger and acquisition firm.
3. Be sure your family knows your exit strategy and succession plan to avoid conflict when the time arrives for you to pursue an ownership change.
4. Have your advisors (financial, accounting and legal) keep you updated on tax and governmental matters that may impact your succession plan.  In other words, expect the unexpected that may come from our bureaucratic friends.

Abe Lincoln reportedly said, “I have never had a written policy; I have just tried to do my very best each and every day.”  Doing your best daily is extremely important, but having a thoroughly thought-out, written succession plan has benefits which will last well beyond your business ownership days.

Ed Kasper, Founding Partner