Irrespective of how it comes about, having your company go through an ownership transition will be the largest 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 simply 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.

To procrastinate on any type of preparation that would facilitate a smooth transition for you company in future is not advisable. In fact, you should have started preparing for your inevitable exit the very day you started trading. That said, it’s better to do something late than to not do it at all.

Keep a pragmatic and open mind and truly seek to work out where your business is at right 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 when the time comes you will navigate this period as smoothly as possible.

Decide on your goals

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

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.

Ascertain your true value 

Loosely put, you need to get an accurate reading of how much your company is worth. Get your company professionally valuated on a regular basis 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 worth that it does,  you can then make the necessary alterations to 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 a unbiased eye. Are you investing enough into 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 sort of decision.  Are your customers aging and therefore s 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 if new owners take the reins of your business.

Outline your strategy

Work with a solicitor, consultant, personal estate planner, or an accountant to make sure that everything is properly documented. Ensure that all key personnel and clients are fully informed of what is happening. Also; realize that this strategy and will likely need to evolve over time along with the business and be prepared to make the necessary changes.

Planning for a transition needn’t be the fear-inducing activity that most assume it to be, and it’s actually just another facet of your corporate strategy. Implement the above tips into your planning process and they’ll soon become a normal part of your operations, one which in turn will pay great 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. Click the link to find out how Succession Link can help you. 

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