In part one of this two part series, we explored the necessity of succession planning and the role it plays in an acquisition process. Here are some key instances where succession planning delivers significant value for Owner/Operators and their businesses:
Succession Planning: Your First Step Towards Retirement
Planning for retirement can be a complex matter, especially since one quarter of business owners have the majority of their net worth invested in their business. For this reason and many others, decisions pertaining to a company’s future should be made cautiously, with the interest of the company’s clients and employees in mind.
Having a succession plan in place allows Owner Operators to exit their business knowing their legacy, staff, and customers will be protected. If the owner’s retirement plans involve an acquisition, succession planning can be executed collaboratively with the chosen acquirer. Oftentimes, acquirers can offer the mentorship and best practices necessary to condition the successor for long-term sustainable success.
Succession Plan for the Unknown
No matter how much time or how many resources you invest in planning for the unknown, Murphy’s Law inevitably states that “anything that can go wrong will go wrong.” Succession planning mitigates some of the risk associated with strenuous unforeseen events.
In the case of an illness, having a workable succession plan in place will help to relieve stress and allow the business owner to focus on their health rather than the day-to-day operations of their business. In such cases, if a family member has been involved in the business, the execution of your succession plan may be less stressful. However, if generational handover is not a viable option, business owners may find value in pursuing an acquisition. The right acquirer will work with you to strategize long and short-term goals, allowing you to achieve your desired exit in a timely matter.
What strides has your business taken to plan for succession? The earlier you begin succession planning, the better able you are to condition your successor and ensure your business is positioned for long-term sustainable success.
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