When it comes to family succession planning, almost everyone recognizes the value in having an outside party to offer guidance, ensure transitions occur seamlessly and mitigate additional stress. Business owners should see any selling or handoff of their business the same way. According to an article from FT Advisor‡ and reporting from Charles Stanley, in 2023, nearly half of business owners reported having no exit strategy. This is typically not from a lack of caring, but that it may not be top of mind.
Often, we hear things like, “I’m not planning to sell my business right now, I’ll worry about that when the time comes.” And we also hear, “I know my business better than anyone else, I’ll know when to sell it.” And while you do know your business best, you can still gain invaluable experience and a tailored process from a succession planning team.
Here are five reasons to consider working with a business succession team now and down the line.
1. They exist to support your business and to improve its value right now.
Having a business succession team means having a group of advisors that ask the tough questions to understand your current business opportunities and risks from a selling perspective, whether you aim to sell in five months or five years. Your team understands the complexities around business succession and do the work every day. While you may know everything about your business, you likely haven’t done a succession plan before and you likely aren’t viewing your day-to-day in the same way a succession team is.
Step one of selling your business one day is to first know its value. Many think they don’t need a valuation because they believe they already know what their business is worth. Knowing your true current valuation is going to ensure you can sell for that amount when you’re ready, and if the number isn’t what you need or expected, it sets a goal post for what you need to do moving forward.
And even if your business is successful financially, your team will help you implement top value drivers and identify business blind spots that buyers are looking for that you may not have considered before, increasing the value of your company now.
2. They help you find your true objectives for succession.
Your team is then going to help you identify your personal objectives for succession – outside of the business purchase. Again, this is likely something you don’t give much thought to in the day-to-day management of your business.
Your team is going to ensure your values are met during the succession process. Have you run your business in a certain way that is important to you to maintain? This could include things like vendor relationships or sustainability practices. Have you given a certain amount back to your local community that you want to make sure continues on? Maybe you were intentional to hit a goal of 30% diverse leadership on your team and want to see that through. These are things you will want to share with your team.
3. They can help you build a timeline.
Once you know your current business value and end goals, a succession team is going to help you build a timeline to get there. This is why it’s smart to start this process well before you are ready to sell. Your timeline may include things like transitioning current processes, implementing new leadership strategies, and more.
4. They help you prepare your team – from your successor to your employees.
This is where things can often get tricky. Maybe you assume your daughter will take over the business, but has she stated her interest? Your team can help you by mediating and facilitating discussions on the transition and can help avoid any family conflict if that is a concern.
Do you have a management team in place now that can continue your business without your help? Beyond that, do you believe your management team will stay with the company after you sell it? Do you have incentives in place to ensure they do? This can include things like stock ownership plans and bonuses. This can often be a critical point for potential buyers and something to plan for.
5. They make it easier for you.
As you plan for the next phase of your business, a succession planning team will likely ask you questions you haven’t considered before. It is their goal to save you time and resources in your planning so that you can continue running your business until you are ready to hand it off.
You have spent your career building your business, planning is the only surefire way to protect what you have built and hand it off smoothly.
Discover how UMB’s business succession team can support you.
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