Getting it right: succession matters

When we advise on business succession, particularly MBO or an employee ownership model, we’re acutely aware there can be several parties involved: 

• Owners (and very often the immediate family)
• Management team and/or employees
• The business itself.

Each party has a common purpose but require a different approach. Their objectives, interests, agendas and route to the outcome can be different. 

Commercial, tax and financial implications can vary for each party – one size solutions do not fit all when it comes to managing succession. 

We arrange one to ones and group discussions with all the parties involved. We listen and understand their objectives and we usually document this in a short 1-2 page document which outlines the headlines and the main aims for the transaction and each party’s objectives. This helps to ensure that all parties start from the same position, and our experience it increases the likelihood that the transaction completes successfully and in the timeframe agreed at the outset.

We clearly explain the various options, choices and sources of funding that may be required to make it happen, taking into each parties position and the potential future tax impacts on the buyers/sellers.

We will scenario plan and forecast the financial implications of your most favoured succession options.  We will help you to look at what actions are required to prepare the business for sale or for transfer. There may be some investment required to bring e.g. systems, premises, websites etc up to date prior to the transfer in order to maximise the overall selling price.

We will give your assessment of what may need done, again we will ensure you have a range of options and choices to consider.

We work with you to ensure that you go into the process with your eyes open.  It is important we highlight the issues, challenges and prepare you for the unexpected during the succession process.

How long does the process take?

Realistically the business succession process takes between 2-5 years. Time taken depends on:

• Is the business in a condition ready to be sold or transferred? 
• Are the new owner-managers ready to take over?
• When does the owner require to receive payment – are they will to accept staged or deferred payments linked to performance (note – depending on how the payment(s) is to be made their are tax impacts for sellers which we will advise on ahead of you agreeing to the transaction so that you know the potential liability and it will be payable) >Selling the business

There are range of things to consider if you are considering an employee ownership model as part of your succession planning.

In our experience, a good place to start is by looking at the business forensically and analysing which of your services or products are making profits and which are not performing and making early decisions to either continue or invest further in some areas and to cut your losses in others. We can help you look at your gross margins, your star performers and help you to streamline, create efficiencies and ultimately maximise the price you receive.

Following this involving your senior team, or all of the employees in the business, a refocusing and energising business strategy and planning sessions should be arranged. This will help to shape, form and create the vision, objectives and key priorities for the new employees owned enterprise.

We will advise you every step of the way, ensuring you are made aware of your options and choices at each milestone in the transfer and the transfer proceeds at a pace that you and the employees are comfortable with.