Succession Planning

Having worked most of your life building a successful business, what is next?  We get this question quite often.  We have a huge number of baby boomers now in their 60s and 70s that are ready (kind of) to pass their business baton to the next generation.  However, this takes not only a true desire to let go, which is extremely hard sometimes, but also the foresight to have an executable plan in place.  That is where we come in.  We have successfully worked in collaboration with business attorneys, CPAs, and next generation buyers to help transition the business.

For a recent succession project we undertook, the husband and wife owners of a very successful service business came to us with their plan.  Sell the business to the top executive in the company over time at a very fair, and somewhat reduced, price.  This was expected to be a win-win proposition.  They would unlock the value of a business they spent decades nurturing, while the younger buyer would get a little bit of a deal.  Most business owners we work with are proud of the business they have built and want it to continue operating.  The owners here wanted the business to continue on as they stepped away.  They wanted to make sure their employees held onto jobs that provided for their families.  My clients also wanted to make sure the price to be paid was supported by the estimated future cash flows of the company.  This is where we had a big role to play. 

Not only did we value the business but, more importantly, we built a model which demonstrated that the expected cash flows from the business would provide the necessary bonuses to the buyer to purchase the company.  Our analysis involved estimating the cash flow from the business pre- and post-income taxes so that we could demonstrate that it was a viable plan.  It worked.  Now our “retired” clients are enjoying the fruits of their many years of labor, while the new owner of the company successfully takes the business into it next chapters of life.  A great win-win story.

If you’re hoping to transition your business to the next generation, we can help you understand your business’s value and structure a transaction for the benefit of you and the buyer.