Succession Planning & Exit Strategies
Business owners will understand the importance of a business plan to help steer them to success and to avoid the many risks along the way. Many entrepreneurs and certainly investors will typically see the whole picture from the get-go, with a clear plan detailing how the business will launch, grow and how they will eventually exit from the business and what that exit may look like.
The make-up of every business is different, as are the aspirations and objectives of their owners, which means that every business plan will be different. Whilst no one size will fit all, the end goal will usually be the same, which is to preserve the viability, continuity and value of the business upon the winding down and eventual departure of the key owner(s).
The starting point is to be realistic about the business and whether it has a value and a future beyond the involvement of its owner(s). In some cases, owners effectively own nothing more than their own job, and their retirement marks the end of the business which will cease to exist. In other cases, the business will have substantial value which is entirely independent of its owners. And there are those which fall between the two, where the business has some value, but the business (and therefore its value and viability) is dependent to some degree on key owners. This middle ground is perhaps the most difficult one to manage.
For some, succession will be focused on passing the business onto the next generation, with or without realising payment on transfer. Where this is not an option or desirable, an onward sale of the business is a common goal for many. This can be to an outside buyer or sometimes to an existing employee or management team. What is important is in determining what is realistic and achievable, and in preparing the business to maximise value and ensuring a safe and trouble free sale transaction.
Tax is an inescapable feature of succession and exit planning, and taking advice at an early stage can be critical to ensuring the appropriate structures are put in place in sufficient time to help mitigate tax implications.
At LCF we help clients understand their options for succession and exit planning, help develop plans to achieving the agreed objectives and work closely with clients to bring those plans to fruition.
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