When embarking on your succession planning journey, make sure you ride with the experts who’ll take you in the right direction.
Succession planning is just like a journey. For those that don’t know the pathway, the road signs and the rules, it can be anything from inefficient to an absolute quagmire. Rather than second guess yourself, or the process, it pays to have people along for the ride who can help guide you through both the smooth and rocky parts.
We consider ourselves as succession planning pioneers. We have a variety of skills but our expertise is built around preparing a business for ‘market’ related to the sale and exit process. This can take many forms.
Our experience and on-going work has seen our team accumulate a wealth of knowledge across the entire succession lifecycle, from the journey of preparation through to the actual event.
Again, business owners may think they know the ropes about many things but, trust us, this is new territory and it often is NOT ‘business as usual’. Rather than go it alone, we’ve found those who ask for help find the process all the more rewarding.
Here are some things to think about to get a fix on the key matters to consider.
Governance—Owners are putting their hands up to learn how to run their businesses with more structure. They’re appreciating that a governing body—to which an owner is ultimately answerable to—is becoming a pillar in leading edge businesses and a great discipline to have. Our attendance at these meetings is on the steady increase, particularly where continuous improvement is recognised as a must-have to keep the DNA of the operation alive and functioning.
Strategic Planning & Growth—A buyer needs to know that the business they’re acquiring has a strong future; after all it’s the future cash flows they are buying. New ideas, market knowledge and unlocking potential are key improvement factors that people will be on the lookout for. There is always a high demand for experts in these areas. Bringing somebody on board with these skills, well in advance of a transition, will positively enhance the value of the business and ultimately the sale price further down the track.
Business Structuring—This is not just about
efficient tax structures; it is also about structuring a business so
that you can sell off certain divisions to different parties, in stages.
having options. It’s about making a business attractive both to the seller and the purchaser and allow for various ‘life stages and options’ to be put on the agenda.
Audits & Reviews—Independent opinions as to the truth and fairness of financial statements lend incredible weight to the validity of a business’s results. A review of the rigour of internal controls and systems also helps shore up the mechanics of how those numbers are derived. Audits are lending powerful third party support to the succession journey.
Funding Assistance—Preparing cash flow models or critiquing a financial projection is fundamental to whether lenders will accept a request for funding assistance. Independent reviews and an assessment of the credibility on those numbers make all the difference.
Negotiations—We help mediate deals and more often than not secure a stronger outcome for our clients. Many business owners feel uncomfortable running this process and ask for some expert support come deal time.
Due Diligence—This is about reducing the knowledge imbalance between buyer and seller. The buyer needs to know the risks and better understand what they are buying. We help buyers successfully break down this information gap whilst adding an independent assessment to support bank funding needs.
Valuations—How much is my business worth? Getting an independent appraisal that will stack up in a negotiation is critical. Drawing a line in the sand is the starting point to securing tomorrow’s investor, be it an internal or external party.
If there’s a tough question, we ask it. If there’s
a tough solution, we find it. The easy part is getting us involved to
help you lead the way. To find out how Hayes Knight can help your
for succession contact:
Aaron Wallace, Business improvement director
T: 09 379 7013 M: 021 711 501
This story originally appeared in Succeed.
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