Succession Planning and Exit Planning

What is Business Succession Planning?

• Business Succession Planning is about strategically planning for the business, the owner’s finances and the people to be prepared to exit or “succeed out” of the business at the same time – maximising business value and achieving a successful exit. It is a strategic planning process and typically takes between 12 to 18 months.

What are the benefits of succession planning?

• Proper succession planning should mean the business value is maximised, the owners are able to exit successfully (and probably retire), the business continues after the transition, preserving the owner’s legacy and the new owners are also able to continue successfully in a good, well-managed and profitable business.

Why is succession planning important?

• Without proper succession planning, the ability to extract value from the business, fund the owner’s retirement and successfully continue the business (benefiting employees, suppliers, customers, and other stakeholders) is unlikely to be realised. A properly designed Business Succession Plan will achieve all of these things whilst maximising business value.

What are the stages of succession planning?

• A succession plan should include five key stages – all focused around value:

  1. Identify value – determining the starting point, including business valuation;
  2. Protect value – making sure we have proper risk management and asset protection in place;
  3. Maximise value – working to make sure business value is maximised and the business is ready for a business succession plan;
  4. Extract value – the liquidity event or transaction; and
  5. Manage value – post-sale or exit ensuring assets are protected and value is invested to fund retirement

What is included in a succession plan?

• A succession plan is far more than a document. It should be a comprehensive implementation plan with detailed steps to cover off all aspects of preparation for the business, the owners, the employees, and other stakeholders. Succession is a journey and will typically take 12 to 18 months at least, to fully implement ensuring owners, employees and stakeholders are prepared.

   

Do all business need a succession plan?

• Yes, all owners will exit their business at some point in time and those that have a business succession plan will always achieve a far better result. Using a succession plan to maximise business value and design a strategic plan to exit will ensure the business, the owners and all stakeholders are ready at the right time.

What is leadership succession?

• Leadership succession (or management succession) is about ensuring you have people within your business ready to step up and take on more responsibility and reduce reliance on the owner. Leadership succession is a process of identifying, training and preparing employees over a period of time.

What is Exit Planning?

• Exit Planning is about designing a strategic plan to prepare all stakeholders, the business itself and the financial position to ensure the owner is able to successfully exit the business. Exit planning can take various forms – sale, listing, family succession, management buy-in or ESOP, private equity or sale of your client base or list. Exit planning should be about preparing for the most appropriate for your circumstances.

   

How do you develop an exit strategy for your business?

• An exit plan should be developed over time. It is a strategic plan and, in most businesses, will take 12 to 18 months to design and implement. It should always include expert advisers who specialise in Business Succession and Exit Planning and can help in designing the most appropriate plan to maximise business value and achieve a successful exit.

What are the 5 exit planning strategies?

• There are several ways to exit your business assuming you don’t want to close up shop and walk away: sale, listing, family succession, management buy-in or ESOP, private equity or sale of your client base or list. The key is to identify the best exit planning option given your circumstances and business, financial and personal goals.

When is the best time to start developing your business exit strategy?

• The best time to start developing an exit strategy is as soon as you start the business. “Begin with the End in Mind” is about starting to design your exit and ensuring all your decisions are focused on getting you closer to a successful exit.