We held a “Meeting of the Minds” workshop on effective succession planning and transitions. For over an hour, a panel of experts including a financial advisor, business valuator, attorney, accountant, and financial software specialist informed the audience with practical advice and tips on succession and exit planning.
Some key concepts participants shared with us included:
1. “Start early, have a plan, and plan, plan, plan.” No matter when you plan on exiting, you must begin thinking through some of these topics. Now (if you haven’t already.) In particular, experts advocated for planning to commence when you start a business, or right after you purchase one.
2. “Have a good team of advisors.” Emphasis here is on the team. Succession and exit planning requires a team of experts in tax, legal, valuation. Coaching can help address leadership gaps or overall readiness. A team can most effectively help think through the tough questions on strategy, timing, tax implications, business valuation, business preparation, life after an exit, and overall emotions throughout the transition.
3. “Make yourself less valuable.” You read correctly. If selling to an outside buyer, experts advised on making the business attractive by increasing the company’s overall value, while decreasing the reliance on the owner. In effect, showing that the business can run without you is key to establishing a sense of security for the buyer.
Participants then had a chance to work in small groups to discuss their own succession and exit planning directly with the experts. Specific issues as to taxation, employee readiness, valuation, ages of successors, and emotions inherent in the transition were all discussed. Invaluable advice, and excellent impact.