In the life of a business, ownership transition is inevitable. Whether selling to private equity or to the next generation of your family, someone else at some point in time will own your company. Most owners don’t realize how this process, often highly emotional, balances a complex set of considerations necessary to achieve their objectives.
Owner transition is commonly driven by age, as you approach a time to slow down or retire. And though you may typically think about transition as an event somewhere over the horizon, planning in advance is critical for you to achieve your objectives. Running the day-to-day operations of a business can often require a complete commitment of time and energy. But too many owners think about their business only as a source of annual income that supports their lifestyle — and spend very little time thinking about their company from a buyer’s point of view.
Owners should think not only about the income generated from their business, but also the value of the business itself. Start a structured thought process around the attractiveness and transition readiness of your business. Give yourself time to prepare the business and implement the changes necessary to achieve the best possible outcome.
Transition could happen sooner than you think
Selling your business when you are ready to retire can be anticipated. But many times, a sale of a business is forced by one of the five Ds (death, divorce, disability, disagreement, and distress). Think through the details of what happens to your business in one of these scenarios.
- Who will have the authority to make ownership-level decisions?
- How will the business be managed going forward?
- Should the business be sold?
Without appropriate planning, these situations can hurt your business — and your family.
Make transition part of your business strategy
Prepare for what can be a complex and emotional process by considering these questions well in advance:
- Does your business have enough value to financially support you through the next act of your life?
- How will new ownership impact the legacy of the business?
- What do you want to do after ownership transition is completed?
How we can help
Our team of professional owner transition advisors work alongside you to understand your specific business needs and goals. We’re here to help seamlessly guide you through every step of the transaction process.