Wednesday, 12 February, 2025

Steps Succession Planning Advisors Take To Help Business Owners Prepare for Their Exits


Reading Time: 4 minutes

Succession planning is essential to avoid disruptions and ensure business continuity during a business transfer. Accordingly, a comprehensive succession plan is a necessary part of every business owner’s exit.

To help prepare a business for the business owner’s departure, certified succession planning advisors typically follow the following process:

  1. Initial Assessment and Goal Setting:
  2. Understanding the Owner’s Objectives:succession planners begin by understanding the business owner’s exit goals. They gather information about the owner’s financial needs, interests in preserving the business’ legacy, future involvement of family members, and the business’ readiness for succession, among other things.
  3. Evaluate Readiness:succession advisors assess the business’s current condition – including its’ financial health, organizational structure, talent, competitive strengths, margins, market position, etc.; and
  4. Set Timelines:succession planners also establish a realistic timeline for the transition process.
  5. Business Valuation:
  6. Conduct a Comprehensive Valuation:succession planners help to determine the fair market value of the business along with the business’ “untapped value.”
  7. Identify Value Drivers:succession planners next highlight areas where improvements could enhance the business’ value.
  8. Identify Succession Options:
  9. Internal Candidates:succession planners evaluate potential successors within the company, such as family members or key employees, and may consider transitioning ownership through an employee stock ownership plan (ESOP.)
  10. External Buyers:succession planners could also explore the market for potential third-party buyers, such as strategic buyers, M&A, and private equity firms.
  11. Develop a Transition Plan:
  12. Leadership Training:succession planners prepare successors through mentorship, management & leadership training and development programs, skill assessments and personal development plans, gradually increasing the responsibilities of the successors.
  13. Knowledge Transfer:succession planners create processes to ensure the transfer of critical knowledge and relationships to successors.
  14. Operational Continuity:succession planners establish systems and documentation to ensure that the business continues running smoothly during and after the transition.
  15. Address Financial and Tax Considerations:
  16. Optimize Tax Strategies:succession planners collaborate with financial advisors to minimize any tax liabilities associated with the exit.
  17. Secure Retirement Income:succession planners develop a plan to ensure the owner’s financial post-exit stability.
  18. Estate Planning:succession planners align the exit strategy with the owner’s estate planning goals to preserve the wealth for future generations.
  19. Legal and Contractual Preparation:
  20. Draft Agreements:succession planners ensure that sale agreements, like buy-sell agreements and other legal documents are in place.
  21. Review Compliance:succession planners confirm that the business is compliant with all legal, regulatory, and contractual obligations.
  22. Execute the Plan:
  23. Phased Transition:succession planners gradually transfer responsibilities and ownership to ensure stability and minimize disruption.
  24. Stakeholder Communication:succession planners clearly communicate the transition to employees, customers, suppliers, and other stakeholders.
  25. Monitor and Adjust the Plan:
  26. Post-Transition Support:succession planners provide ongoing guidance to the new leadership team to ensure a smooth transition.
  27. Evaluate Outcomes:succession planners periodically assess the transition’s success and make adjustments, as needed.

In summary, succession planning consultants guide business owners through a structured process that ensures the business’s longevity, aligns with the owner’s goals, and maximizes value. Their comprehensive approach reduces risks and prepares the business, new leaders, and the owner for a successful exit.

About Greater Prairie Business Consulting, Inc.:

Greater Prairie Business Consulting, Inc. is an award-winning, national consulting practice serving entrepreneurs, small to mid-sized privately held and family-owned businesses and middle market companies of any type with revenues between $1 million and $250 million. The firm helps small, mid-sized and middle market companies maximize their performance and exit.

Greater Prairie Business Consulting, Inc. can be reached by calling 1-800-828-7585 or by emailing: info@gpbusinesssolutions.com.

 

 

About the Author:

James J. Talerico, Jr. is an award-winning author, speaker, and a nationally recognized small to mid-sized (SMB) business expert.

With more than thirty- (30) years of diversified business experience, Jim has a solid track record and an A+ BBB rating helping thousands of business owners across the US and in Canada tackle tough business problems to improve the performance of their organizations.

His client success stories have been highlighted in the Wall St. Journal, Dallas Business Journal, Chicago Daily Herald, and on MSNBC’s Your Business. He was named “Texas Business Consulting CEO of the Year,” by CEO Today Magazine, identified as a “Top 10 Management Consulting Entrepreneur to Watch in 2023” by Entrepreneur Magazine, was listed among the “10 Most Visionary Companies to Watch in 2023” by Inc. Magazine, and has also been ranked among the “Top Small Business Consultants” followed on Twitter.

For more than half a decade, Jim was a regular guest on “The Price of Business,” a nationally syndicated radio program on Bloomberg Talk Radio and has also appeared as a subject matter expert on many FOX Radio interviews. He is a regular contributor to several blog sites and has frequently been quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, The Entrepreneur’s Review, and on INC.com, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.

Jim received a Gold “Stevie Award” for “Thought Leader of the Year,” a Gold “Stevie Award” for “Media Hero of the Year During Covid” and a Bronze “Stevie Award” for “Best Entrepreneur” in the Category of “Business and Professional Services” at the American Business Awards ® in New York City. The competition received more than 3,700 nominations and is the premier accolade for business excellence in the US honoring organizations of all sizes and industries. Jim also received an “Outstanding Leadership Award” at the Money 2.0 Conference for his contributions to the financial services industry.

Jim is the author of “8 Steps to Becoming an ETHICS FOCUSED ORGANIZATION,”™ a small business certification program that utilizes a unique eight – (8) step approach for strengthening ethics in any organization. The certification program won the Better Business Bureau’s “Torch Award for Ethics” for the North – Central Texas Region, the International Better Business Bureau’s “ Torch Award for Ethics,” and a Gold “Stevie Award” for “Ethics in Sales” at the International Sales & Customer Service Stevie Awards ®. Participants who complete this certification program are eligible to receive eight – (8) continuing education units from the University of Texas’ Division of Enterprise Development.

Jim received his Certified Business Exit Consultant (CBEC) ® designation from The International Exit Planning Association (IEPA) to help entrepreneurs, small business owners, family businesses, and middle-market companies maximize their business exit, and he received his certification in succession planning from the ASPE. Jim currently serves on the IEPA’s education committee.

Jim is also a Certified Management Consultant (CMC) ® and has been an active member of the Institute of Management Consultants.

 

 

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