Guest Blog - Succession planning is a process not an event
Guest Blog - Succession planning is a process not an event
By: Suzanne C. Loomer, MAcc, CPA, CA, CBV
When is the best time to sell your business? Business owners are more likely to maximize the price they can get for their business when the following three conditions are in place:
- market conditions for transactions are favourable,
- the business is well positioned for a sale, and
- the owner has put in place strategies to maximize their after tax proceeds and is ready to sell the business.
Business owners should assess if their business is well-positioned to take advantage of the opportunity to sell. If it is not, they should start to groom the business now for transition. A clear 3 to 5 year plan for succession will help determine the best time to sell, how to maximize value and how to best transfer that value to a new owner. Despite the prevalence of articles and books dealing with “succession planning,” many business owners often don’t consider strategies to increase the salability of their business until they are forced to. By then, the owner may not have the variety of choices available, or the time, to make improvements to the business so that they can maximize their sale proceeds.
To understand how to maximize the value of their business, business owners must understand what drives value in their business. Uncovering new ways to increase revenue and profitability can improve value, but so can many other activities, like:
- putting in a strong and experienced management team so there is less reliance on the owner for day to day operations
- focusing on building a good quality customer base
- making the most of strategic advantages (like intellectual property)
- building a strong market position in your industry
- putting in place quality information systems that provide data for management decision making
- Estate planning for the business
- Insurance considerations
- Tax planning and succession planning
- Shareholder agreements
- Ownership of key assets or redundancies
- Debt management and financial leveraging
About the author:
Suzanne Loomer is a Partner in KPMG’s Deals Advisory practice in Atlantic Canada. Suzanne has more than 22 years of experience advising small, mid-market and multi-national companies on business valuation matters for mergers & acquisitions, succession planning, disputes and others. An accomplished speaker and author, she has written three books and regularly writes and speaks about business valuation topics across Canada.
