The more people I meet who own their own business or company the more I am shocked at how few of them ever take any time out of their business day to ponder the day they will finally have to retire and hopefully enjoy the fruits of their labour. The reality is most business owners lack insight into their future and transition out of their business. The excuses are far too great to list in this article, but believe me I have heard them all.
So what are the options for a business owner to pass on their business. Well the obvious one is to find a buyer. Well through personal experience with one of my clients that is harder than you think. The first problem is that an owner always overvalues their business and the buyer always undervalues it which does not make for a congenial negotiation. In reality the person that undertook the business valuation explained in very real terms that when someone is contemplating buying your business they always have viable options where to invest their money at a fair return. They also won’t have to worry about dealing with disgruntled employees, irritated clients and erratic suppliers. You get the picture.
Another possibility is to pass it on to any children who both have an interest and capability of carrying on the business. Then you have to deal with the reluctant parent giving up control of their business to their heirs. Finally there is the possibility of selling the business to one or more of their existing employees. The problem here is how can they afford to buy the business from you? Then we always come back to the issue of giving up control of the business you have put your blood sweat and tears to grow over so many years.
My purpose in writing this piece was two-fold to breach the topic of succession planning and to raise some issues pertaining to it. In further articles I will get down to the nitty-gritty and talk about some approaches and solutions for this age-old dilemma.
If you have sold a business before, please share your experience by commenting below.