Rachel Miles' viewpoint on succession planning

 

02/07/10

 

Rachel Miles, portfolio team leader

You’re the owner/manager of a business and you’re ready to retire or step down. What happens next? Why shouldn’t you make the most of a lifetime’s work?

 

Succession is a question every business needs to address at some point and the wisest business owners/managers plan well in advance.

 

According to a recent UK Government survey, only two thirds of UK businesses have a formal succession plan. The rest have no clear exit strategy, which means handing control to a new owner can be very messy.

 

At worst you could lose assets, your business could close and you won’t benefit from your lifetime’s work.

 

Smooth transition

 

Finance Wales encourages businesses, including businesses we’ve already invested in, to plan properly for succession. We have the funding and expertise to help with a management or employee buy-out.

 

So, whether you’re selling to your existing management team or considering a trade sale, we can use our experience to help you steer clear of the pitfalls.

 

Valuing your business

 

It’s important to be realistic when valuing a business.

 

Think about your business’ key financial indicators and how you could improve them to get the best valuation. If you’re to achieve the best return, you’ll need to communicate your business’ value to potential buyers.

 

Remember, in reality, a business is only worth what a buyer will pay for it!

 

Steps to succession

  • Think about things from a potential buyer’s perspective.
  • Create a formal succession plan – this will need to be robust, so work with your advisors to make sure you’ve covered all angles.
  • Is there an obvious buyer for your business? Would any of your existing senior managers like to buy the business?
  • It’s likely that any potential buyer will need the right funding - succession can be a costly business. Finance Wales has funds available and the expertise to help structure the right funding package.

Contact me

 

If any of this seems familiar, it may be time to contact me. I’m keen to help your succession go as smoothly as possible.