Wine Industry Articles
The next stage for your company … and you
Grapes to Wine
Summer Issue 2005
by Brian Cockburn, CA
Even in the most rewarding and enjoyable business, there comes a time to move on.
Developing a good succession plan for your business is not just a matter of collecting a cheque from the new owners and handing over the keys.
It can be a multi-year process, and your best way to start is by determining your priorities and values, as they are a guide to action.
It could be that your main objective is just to sell to the highest bidder, to ensure a comfortable retirement for yourself, or to have enough cash on hand to fund the next stage of your life – possibly building another business, such as opening up that Bed & Breakfast you’ve been thinking about for years.
This may be your best option if yours is not a family business in which your spouse, children or other family members are employed. You can ensure your family’s financial security by making sure that your payout is as large as possible.
To make this future happen, you might start by taking actions designed to improve the balance sheet, or to make the business more appealing, for the short term. This is the financial equivalent of a good coat of paint – and it might involve an actual coat of paint on some of the buildings.
You will need complete and accurate financial statements going back several years – and it helps if these statements are audited. Be sure that those records are up-to-date, in case a potential buyer suddenly appears and you want to be able to move quickly.
Different considerations may apply if family members are involved, and one of your purposes is to provide continued employment for them. However, you need to ask yourself if working in the family business is really their best option. While your view might be that you are doing them a favor by continuing to provide employment, they may in turn feel trapped by your apparent need for employees. Perhaps the kids don’t really like the hard work involved in ice-wine harvesting, or bottling, and would really feel much better working in an office.
The best way to find out is to ask them what they want. You may find that some members of the family would prefer another line of work, and selling the company may help provide the financing to make their dreams happen.
You may also set a high value on providing continued employment to other members of your workforce who have been with you for a long time. You could not always count on a third-party buyer to have their interests at heart. In such a case, selling out to employees in a management buyout (MBO) may be your best option.
Many winery owners set a high value on the continued good stewardship of the land, or of preserving the value of the label. In such cases, it is best to seek out a “next generation” that has demonstrated willingness to adhere to the values you have established.
Whatever your choice, it is important to have the best team of professional advisors. This can include an accountant who can provide business counsel; a lawyer who can prepare corporate papers that include appropriate security; and a valuator who can help set an appropriate value on the business.
Good advice helps your sense of satisfaction that you have done what you can for all concerned.
Brian Cockburn is a Partner in the Vernon BC office of BDO Dunwoody LLP. He is involved in all areas of client service including accounting, auditing, taxation, business consulting and succession planning. He can be reached at tel. 250.545.2136; bcockburn@bdo.ca
