The 5 Stages of Effective Succession and Exit Planning

Succession and Exit

The 5 Stages of Effective Succession and Exit Planning

By , January 9, 2020

According to the PWC 9th UK Family Business Survey 2016 43% of business did not have an effective succession plan. As baby boomers retire, we are about to see the biggest inter-generational transfer of wealth in history.  This makes it even more important to get succession planning right. The average age of business owners in the UK is 49 years. Many business owners see themselves working in the business beyond 65 years of age.  An astounding 64% relying solely on the sale of their business to fund their retirement.

Effective Succession Planning is a Challenge.

It’s not easy. If it was, more businesses would be doing it. Equally it is not as complicated as you might think if it is planned and executed as part of a logical, comprehensive process. At Succession Plus we use and recommend a five-stage process for effective succession planning.  The focus is on improving value:

  • Stage One: Identify Value
  • Stage Two: Protect Value
  • Stage Three: Maximise Value
  • Stage Four: Extract Value
  • Stage Five: Manage Value

All of these stages have a number of key steps, 21 in all.  Each is designed to effectively prepare the business, the owner and the financial position to maximise business value.  The goal is to achieve a successful transfer of ownership and control for the business owners eventual exit.
This process has been developed over time.  When Craig first published Enjoy It in 2006 the process had only 9 steps.  These were mainly focused on preparing the business for sale.  As we worked with clients and learned more about their needs and the issues that were stopping them from being successful the process was further developed into 11, then 15 and finally 21 steps.  The process now covers all of the key issues — business, personal and financial – to ensure maximum success.
The process allows time and space for owners to get very clear on what Business Succession and Exit Planning means to them.  For many it is not about the money.  It’s more about preserving their legacy, looking after staff, customers and suppliers.  The process needs to firstly identify the key drivers and aspirations of the founders.  Secondly it must provide a mechanism for them to be successful in achieving those key goals and outcomes.

Implementation

To fully implement the 21 steps, we typically work with clients over a 12 to 18-month period (with some clients much longer).   We always work closely with the clients’ key advisers — accountant, financial planner, lawyers, bankers etc. This helps speed up the process and ensure the best possible result. This is very much a trusted adviser relationship.  We work closely with all stakeholders to balance interest and ensure all business succession and exit planning needs are met.

Christine Nicholson

Christine Nicholson

Partner

Christine is a Chartered Management Accountant with a Law degree who brings 25 years of wisdom, know-how, and experience of working with SME’s. Her long and varied career has included working overseas, rescuing technology companies, building a healthcare business from scratch and running a zoo.

She started her first successful multi-million turnover business in 2002 and has grown business ventures for others including a bankruptcy to 8-figure exit in 18 months. Christine’s engagement consistently gets her clients increasing their turnover with improved profitability and fewer working hours.

She has saved clients thousands and increased the value of their businesses by millions. Since 2008 she has generated over £100m of crystallised value in business exits.

Christine is also an author of 3 books on Finance, Business Management and Technology businesses. She is a seasoned speaker and Professionally Accredited Member of the Association of Business Mentors.