Irrespective of how it comes about, having your company go through an ownership transition will be the most significant period of upheaval it will ever see. Even though it's something all businesses eventually go through, it's often treated in a hush-hush manner, but you shouldn't fall into this mental trap.

It should be seen merely as an aspect of your corporate planning that allows you to ensure your company's long term viability, even though most don't see it this way.

Procrastinating on any preparation that would facilitate a smooth ownership transition for your company in the future is not advisable. It would be best if you had started preparing for your inevitable exit the day you started trading. That said, it's better to do something late than not to do it at all.

Keep a pragmatic and open mind and genuinely seek to work out where your business is now. In any event, you have two options when it comes to transitioning your company. It will either be internal or the sale to an outside party. The steps below will help you put your plan together so that you will navigate this period as smoothly as possible when the time comes.

Decide on your goals

What do you want life to look like when you're either fully or partially retired? Your identity may be tied into the ownership of your business, but that's not always the healthiest mindset for you to have. Also, remember that giving up your company leadership doesn't mean you have to exit the industry entirely. You're just reaping the financial rewards of all your hard work.

Ascertain your true value

Loosely put, you need to get an accurate reading of how much your company is worth. Get your company professionally valued regularly, so you know your true worth, but also find out why you have the value that you do. When you know exactly why your company has the value that it does, you can then make the necessary alterations to strategically improve your value and make more money during your transition.

Look closely at your company's structure

It's best practice to sit with your accountant and review your corporate structure every couple of years. Having done so regularly will be of great benefit during a transition. Look closely at your day to day operations with an unbiased eye. Are you investing enough in your business? Being overly conservative with expenses can lower your business's worth when you're trying to sell it.

Looks closely at your customers' demographics

A potential buyer is going to look closely at your client base before making any decision. Are your customers aging and therefore a depreciating asset? Is your outgoing AUM higher than the young incoming AUM? If it is, then you have some thinking to do. Another thing to ask yourself is how loyal your customers will be when new owners take the reins of your business.

Look at your strengths and weaknesses

Look at your company's culture, capital, brand image, balance sheets, and more to create a very firm vision of your unique advantages and disadvantages in the marketplace. Be sure that you're completely clear about this before looking at possible buyers or replacements.

Outline your strategy

Work with a solicitor, consultant, personal estate planner, or accountant to make sure that you have everything properly documented. Fully inform all key personnel and clients of what is happening. Also, realize that this strategy will likely need to evolve along with the business. Therefore, you should be prepared to make the necessary adaptations along the way.

Planning for an ownership transition needn't be the fear-inducing activity that most assume it to be, and it's just another facet of your corporate strategy. Implement the above tips into your planning process, and you'll soon adopt valuations as a regular part of your operations. In turn, this will pay high dividends when that transition eventually occurs.

Succession Link has built an online platform that makes it easy and convenient for you to find the perfect buyer for your financial practice or to locate a practice that is the right fit for an acquisition and the growth of your business. Find out how Succession Link can help you.

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