There are a lot of tricky questions around succession, especially when the business is really dear to you.
Maybe you’re unsure who’s going to take the reins? Or do you have someone lined up already but not sure how much to sell for? Do you give them a discount? Do you wonder if you need to keep working in the business, but aren’t sure how that would affect price?
The crux of the decision is making sure it gets into the right hands
and gets looked after properly.
How much time do you need?
Who will be your successors?
The choices are family, senior managers or other trusted people within the business. Maybe a trade sale, putting it on Trademe or listing with a broker. Maybe getting picked up in an M&A deal?
Or maybe you plan to keep it but just put someone in it to run it for you. If your business is big enough and you plan to keep your business with proper governance and management, succession will take care of itself.
Whichever option you choose, it’s a good idea to start planning early. It can take a while.
How to approach succession
Think about what you really want. Do you want to keep your whole business? Part of it? None of it?
Think about how well the business needs to perform for someone else to want to own it. Is there a gap? How do you get there?
If you plan to keep it in the family, start having the conversation with potential successors. Depending on how your kids think, it can take a while to get used to the idea.
It’s good to have an initial discussion of whether there is any interest, and to talk about options on how to get them involved business earlier to see how they do.
Share your story of why, how, and where the business is today, and what is needed for future challenges. This gives them time to grow personally, professionally and within the business – whichever combination of these are important.
If family isn’t going to work, think about whether any of your staff would be able to step up and own, or part own, the business. Have these conversations early.
You could also think about setting up a limited (or even a company-wide) employee share ownership plan to get the idea out there.
Think about whether your current leadership and governance is enough for the employees to carry the business on without you.
Why is planning for succession important?
This is part of your story and your life. Why not give it a legacy, and let it be part of others’ story too? Your story could live on much longer than you do.
The beauty of having a business rather than a job is that the rewards and return don’t need to stop when you want to stop. You can enjoy the fruits of your labour well into retirement with passive ownership if you plan for this well.
Sometimes, the people that will be part of the ongoing story will need upskilling in many areas. It is best to start this properly while you still have the will and energy to be involved. They will be ready to step up when you are ready to step down.
