Anyone approaching retirement age who owns a business has two big decisions ahead of them.
Firstly, when do they plan to exit the business? And secondly, what form will that exit take?
Succession of the business may take a number of forms including:
- Sell the business to either an unrelated external third parties; management; family members; or private equity groups
- Transfer the business to the next generation of family members if a family business (not a ‘sale’)
- Float on the ASX
- Consider alternatives such as Crowd Sourced Funding
For many business owners, consideration of the family and their needs and wishes is tied up in any decision about the future of the business.
To help decide what is the right approach for each owner and their business, questions to ask include:
- What is important to you and your family?
- What are your values and does your exit strategy align?
- Do you need funds from the sale of your business to fund your retirement or lifestyle after you are no longer owning or controlling the business?
- Will you consider vendor finance options?
- Do you want to make a ‘gift’ to your children?
Succession planning is more than the transition of the management and ownership of the business. It needs to align with you and your values as well as fund your lifestyle ‘post’ succession, in a tax effective manner.