Whether you are a small, family-owned business or a large private company with professional management, the transitioning of your business through the course of your stewardship is critical.
We typically see four different types of transition circumstances:
- Succession with a focus on long term family ownership and management
- Transition with continued family ownership employing professional management
- Family succession with an eye towards potential merger or sale
- Transition from private ownership to public ownership
Every business transition has its own unique challenges, but through our experience with our private company clients, we have identified a number of common questions:
- Should the business continue to be family/stakeholder owned?
- How do we transition?
- What is a fair value for the business?
- How do we compensate different families or different family members?
- How will the family/stakeholders reach a consensus on a succession plan?
- How do we maintain objectivity through the process?
- Will the designated successors have the proper training?
- What is the long term strategic vision?
- Do we have a contingency plan in place?
- What will post-transition look like?
- What are the financial and reporting arrangements?
- Have we completed an effective tax strategy?
While there is a substantial need to focus on the transition plan process, it is equally important to focus on how to ‘protect and grow’ the value of the business. There are many tools and tactics which typically focus on one of four key areas:
- Retain and expand the customer base through such methods as:
- Long term customer retention strategies (contractual arrangements)
- Expansion in new, but aligned markets
- Geographic growth
- Supply chain integration (ensure your product or service is relevant, unique and key to your supply chain)
- Protect and grow the value of the business assets:
- Maintaining capital asset productivity and extending useful life
- Inventory management
- Capitalizing on real estate holdings
- Key talent retention and acquisition
- Grow revenue through merger, acquisition or divestiture:
- Strategic business planning
- Targeted acquisitions
- Financial modeling combined entities
- Sustainable increases in bottom line:
- Process and continuous improvement strategies
- Resource management
- Technology solutions
- Sale of non-core assets