Succession Plans Lead to Success when Selling a Business
A recent U.S. Trust Insights on Wealth and Worth survey found that roughly two-thirds of business owners who responded to their questions didn’t have a formal succession plan. Like many other long-term planning issues, some business owners ignore this strategy and don’t recognize how complicated and time-consuming the sale or transfer of a business can be. While many entrepreneurs excel at thinking about the big picture and the future growth of their companies—many don’t look long-term past their own leadership term.
Even if you’re many years removed from making the transition for your company to your heirs or outside managers, you still should find out the value of your business. This is especially true if you are looking to get out of running the business sooner rather than later. That looks to be the case for many folks, as the survey said that seven in 10 business owners were over age 50.
A wise move for every business owner is to engage an outside, third-party evaluator to look at your business and value inventory and accounts receivables. This can help uncover any issues with what you believe the value of the business to be and what buyers will be offering. An experienced valuation expert will also have knowledge of other businesses in your industry, the business climate in Sac, and ideas to boost your business’ worth and overall health.
Admittedly, all of this thinking can give you a headache, especially when you’re trying to run your company simultaneously. That’s why you need to stay on top of important issues like valuing your company. You want to be ready for when the time is right. Perhaps you’re not planning to sell, but you get an offer for the purchase your company. How will you know if it’s a great offer? You’ll know if you have a good understanding of your company’s worth. Even if you’re not planning to sell for another five to 10 years, you need to be ready for that call from out-of-the-blue that may be worth your while.
In addition to partnering with a business valuation expert, business owners should be assembling a solid team to assist with this process. This can help avoid some those headaches from trying to do everything yourself. It also gives your successors (if you are transferring the company to children or your managers) the opportunity to be immersed in more of the day-to-day operations. This is the best time to think about who you’d like to oversee the day-to-day operations and also shepherd you through your succession preparation and the sales process.
In many instances, the length and complexity of the succession process is severely underestimated by business owners looking to sell. Those that are starting to prepare have the luxury to make their decision and then have time until the actual transfer, whether it be to their children, long-time managers, or other investors or buyers. These folks will have the opportunity to leave their business on their own terms.
To discuss business succession planning and opportunities to sell your business in the Sacramento area, please visit our websiteServices and choose from the drop down menu the information you’d like.
For more immediate help, please send an email to Andrew Rogerson or call our office at (916) 570-2674.
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