Business transition is the process
of moving an organization into a new generation
of leadership and ownership. It is often difficult
for entrepreneurs to give up ownership and control
of a business they have built over many years of
hard work. However, it is clear that a transition
will come. The causes of the transition are many:
- Death
- Retirement
- Illness or disability
- Divorce
- Bankruptcy
- Mental illness
- Changes in lifestyle or
goals
- Irreconcilable business
differences
The important part is whether
the owners, the company and the successors have
planned for that transition.
One of the biggest barriers
to planning a business transition is the belief
that when we are ready someone will appear at
the door ready, willing and able to pay a fair
price for the company. Unfortunately this rarely
happens. Studies show that only about 21% of family
owned companies make the transition to the second
generation, whether it is to family or to others.
As we know: No one plans to fail they just
fail to plan. Long term planning is too easy
to put off. Often it is further complicated by
the different goals and objectives of multiple
owners.
The steps in transition planning
are fairly straight forward:
1. Identify those who will
be the successors
2. Arrange it so that the
successors will be around for the long term
3. Put a written succession
plan in place
4. Fund the transition plan
5. Prepare the successors
and the company for the transition
6. Leave
the premises!
Our firm is prepared to assist
clients in the planning and execution of a successful
transition through:
- Consultation and advice
on the process
- Assessment of the best
methods for making the transition
- Negotiation and preparation
of Buy-Sell Agreements
- Formation of partnerships
to help fund transition
If you or your business needs
more information or assistance with business transition
planning, please contact
Marlowe McNabb, P.A.
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