Insight 37 - Magazine - Page 11
Succession Planning
O
n 9th November 2023 I had the
pleasure to give a webinar as part
of the WebeXions series. The title
was Succession Planning.
I asked the question: Is it time to start
planning for your succession if you have
not already done so?
I encourage you to consider this as part of
normal business practice as I come across
too many business owners who want to
move onto the next stage of their lives but
are unable to realise a capital sum for their
business either by way of a trade sale,
a management buyout or an Employee
Ownership Trust (the subject of a previous
WebeXion webinar)..
Succession planning, amongst other
things, involves, being able to answer
these questions:
• Have you appreciated how much of your
wealth is tied up in your business?
• Do you know how much income you will
need in retirement?
• Do you know if you are financially
"I see too many business
owners who have a view
their business is worth
more than the market is
prepared to pay"
independent – your freedom point
(see Insight Number 37) and why it is
significant?
• Do you know the difference between a
successful and a significant business?
I see too many business owners who
have a view their business is worth more
than the market is prepared to pay and
are surprised when derisory offers are
received, if at all. That is why so many
advisers say the owner's over estimation
of value was the number one factor in
failed transactions.
Take a simple example. If you owned an
E-Type Jaguar in mint condition you would
expect to sell it for a tidy sum. However, if
it had sat in a garage for 30 years gathering
rust, dust and mildew would you expect
to receive the same value when you come
to sell it?
Furthermore, if you do not know how
much income you require in retirement
how can you set about establishing a fund
not knowing how much it needs to be?
It is impossible to know where you are
going without a base. To grow the value
of your business will increase the options
and make it more likely you can transition
the business on your own terms. Being in a
position to sell your business even though
you do not wish to is an option few owners
consider.
When business owners have identified
their personal, personal financial and
business goals, then they have a clear
target. Once they have a target, it becomes
easier to work towards it. The only way for
this to happen is through planning.
CLICK HERE to hear the recording.
Andrew Watkin is the founder and owner of Assynt Corporate Finance Limited
(www.assyntcf.co.uk) - a new generation of advisory chartered accountancy practice.
Assynt is a member of The Corporate Finance Network, whose member firms are
recognised as being the experts in smaller company finance transactions.
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