All business owners want their business to succeed after they’ve stepped away. Whether you plan to leave your company to a family member or put it on the open market, how do you guarantee your legacy and ensure a smooth business transition?
1) Plan Early. – There’s no such thing as planning too early, especially for a decision as big as this. If you have a specific successor in mind, take the time to train him or her. If you plan to sell your business, establish an effective team of managers who will ensure unity.
2) Be Transparent. – This tip is especially important if you are transitioning your business to a family member. Take extra steps, such as having an independent financial company analyze your company. Your customers – and even your competitors – will be wary of any dealings that could be construed as suspicious. Be proactive and don’t give them reason to worry.
3) Remember Your Roots. – A business transition is often seen as a scary time for everyone. Quite often the perception is turnover and or layoffs are soon to follow. Make sure that your staff knows they are valued even when you are no longer their boss.
Set up an incentive system for longtime employees. Brainstorm incentives to encourage them to stick with the company through the transitional process.
4) Advantages of Earn-out Agreements. – What’s the value of your business? When negotiating the sale of your business, an earn-out arrangement can bridge the gap between you and the buyer.
When you still have skin in the game – tied to the company’s performance after the sale – you bring peace of mind to the buyer on the valuation of your company. Seek legal counsel, however, to ensure all the appropriate provisions are taken into account.
Thinking of Selling Your Business?
Talk to one of Countybank’s wealth managers and business banking specialists to ensure a smooth business transition. Whether it’s a merger, buy-in or buy out, grow with Countybank. Call (864) 335-2400.