Two emerging trends in the small and medium-sized business sector seem to be conspiring to make family succession a thing of the past:
- Fewer business owners want or expect their children to step into their shoes
- Children of business owners are increasingly working outside the family business and not intending to take over from their parents
Young entrepreneurs these days seem more interested in building up their own business with a view to selling it on once it has become established.
Disposal options
With family succession becoming less of an option, business owners are faced with the problem of how to extract themselves from their business when the time comes for them to retire or move on to another venture.
Other than passing your business interests on to members of your family, the principal options for disposing of them are:
- Selling your share in the business to your co-owners or partners
- Selling the business to a third party
- Public flotation or sale to a public company
- Selling the business to the management or entire workforce
- Winding up the business
Exit strategy
Planning a strategy to maximise the assets of your business on sale requires patient, advance planning. You should start considering the issues a good five years before you plan to sell. Don’t forget to consult solicitors, accountants and independent financial advisers before selling your business.
Most small businesses exit by trade sale. Some estate agents deal with the sale and purchase of businesses. However, there are firms who specialise in buying and selling businesses. You can find these by searching Google.
Smaller businesses are usually reliant on a few key members of staff. It is important when selling a business that potential buyers see plenty of valuable, tangible assets that stand out whether you or your key employees remain or not.
In short if you are planning to sell your business in the foreseeable future, it is beneficial to develop products, services and systems that are not heavily dependent on you as an individual or upon key members of staff.
Each of these options requires careful planning. Besides the complexities of the legal arrangements, there are important matters such as valuing your share of the business and timing the disposal to minimise your tax liabilities and maximise your gains.
These are matters in which we have experience and expertise.
.
Related Article: 4 Ways to Avoid Business Failure
Please call Noel Murphy today on 021-4310266 if you need further information on exit strategy planning or a consultation.
<!–[endif]–>