Prepare for Your Company’s Future
It might seem like there is never an ideal time to plan for the future, particularly when you’re in the thick of running your company and dealing with the day-to-day hassles that demand your attention right now. However, it’s important to ask yourself where you’d like to see your business in the next few years and it’s never too early to start to make those all-important future plans.
The Importance of Transition Planning
Business transition planning is the process of transferring your business, while maximizing your personal financial security, minimizing taxes and protecting your retirement assets. Planning allows you to determine how, when and to whom you will transfer your business. It also offers ways to preserve your company’s value throughout the process, ensuring that you are prepared for a potential sale or any unforeseen event. By being proactive, you gain peace of mind that you and your company are ready for the future.
Today, there are 816,000 private and family businesses in Canada that are planning to sell or pass on their businesses. A staggering 71 percent of those business owners intend to retire in the next ten years. Many have not prepared their business to succeed after they exit. Succession planning is therefore a crucial activity for the world’s aging population of business owners.
Building your business and making it a success was not easy. Transitioning out of your business can be even harder. Have you taken a moment to consider how to do this? Do you know the options for your business going forward? Can you exit your business in stages? Do you know the current financial value of your business? A formal succession plan can help you answer these important questions and allow you to fulfill your short-and long-term business goals, ensuring your business endures after your departure.
Time to Start Planning Now
Ownership of your company will change at some point and it is far better to be proactive than reactive. Just like retirement planning, it’s best to begin preparing for the transition of your business early, and review your plan often. Planning for your business’s transition in advance is optimal, and it’s essential to have a plan in place before transitioning.
Many business owners believe that they have no time to deal with planning the transition of their business – the running of a company can be all-consuming and feel like it takes up every available minute. Engaging a team of professionals to assist you in establishing a transition framework is a viable and cost-effective option, and will put the onus on the experts to help you do the work.
How M&A Experts Can Help
When developing and managing your succession strategy, collaborating with a team of professionals can help ensure your success. Your team starts with your M&A advisor. They will oversee and coordinate your strategy, working with a team of internal and external experts. The planning framework may include family harmony issues, business valuation, methods of transfer, tax and legal implications of each sale option, and successor development.
Deciding how and when to pass on ownership and control of your business involves careful thought and planning. There are many transition scenarios, each having their own pros and cons. Experienced M&A advisors can help you choose the right option for you and your business. Once you have determined the succession plan that meets your goals, it is important to share your plan with family members and key employees at the appropriate time to ensure your wishes are carried out.