Succession Planning courtesy of Deloitte:
What can precipitate a sale of your business?
- Acquisition or disposal of a business unit for strategic reasons
- Change in personal circumstance
- Unsolicited offer
- Age, helath, retirement
- Release capital to take advantage of other opportunities
- Point in business cycle
It is important to "get it right"
- Business represents a substantial capital asset
- Large amounts of owner and shareholder wealth are tied up in their businesses, especially SMEs
- You only get one real shot at maximising value realised
- A failed attempt can lead to a perception of "damaged goods"
What does a full sale process look like?
- A full sales process is not vital for every sale but the underlying principles are
- Other Options:
- Shorter
- Vendor due diligence
- Bilateral negotiation
What do you need to do?
- Sales strategy is critical - what do you want?
What makes a successful sale?
- Sound strategy
- Appropriate process
- Presenting a 'tidy' business
- Maintaining confidentialities
- Talkjing to the right people at the purchaser
- Good relations/relationships with buyers
- Understanding where the value lies - brand, networks, customers, people
- Understanding the buyers objectives - price allocation
- Good management presentation -right people, right messages
- Finding the right buyers
- Appropriate disclosure
- Good advice, used appropriately at the right time
Common Pitfalls
- Take the first offer which comes along
- Untidy business documentation
- Messy accounting records
- Underestimate time commitment and duration
- Businesses which can't run without their owner
- Poor communication with buyers
- Weak management/management who don't support or subvert the sale
- Multiple communication with buyers
- Regulartory approvals
- Price drift from indicative prices
What you should be doing now and why
- Planning for growth, acquisitions, succession, exit
- Housekeeping
- Are all contracts signed and up to date
- Accounting and tax is up to date
- Leases and agreements in place
- Separateion between personal and business matters
- Asset register up to date
- IP protected
- Employment contracts in place
- Business strategy and planning documented
For more information or assistance please
visit Deloitte's website
Succession Planning from Westpac:
Succession planning - a catalyst for growth.
What can be achieved?
- Allow owners to access the value accrued in their business
- With the right purchaser - identify or introduce new management and minimise disruption to the business
- Enable the owner to introduce a new financial partner to relieve capital constraints and support growth opportunities
- Allow owners to take a less active role
What does a funder/bank look for?
- Quality of management
- Sponsor credentials and track record
- Stability and visibility of earnings
- Size and market position
- Competitive advantages and barriers to entry
- Industry dynamics
- Exit Options
Typical Issues
- Often little planning or thought to the next stages in a business life cycle
- Business not optimised or prepared for sale
- Inadequate governance and / or internal controls
- Usure of true value of business
- Unaware of options available for sale and process required
- Not sure how to kick star the process
Options available for a full or partial exit
- Franchising (retail)
- Sale to management (MBO)
- Trade Sale
- Sale to private equity
- Public Listing
For more information or assistance, please
visit Westpac
Other avenues for information on Succession Planning:
