Frequently the answer is founders or successive generations of family-owned businesses where current senior ownership desires to leverage the shareholder equity they have built to fund their retirement and keep the business in the family.  

Perhaps an internal employee group wants to plan a purchase and succession from the founder and owners of a company.

Sometimes a company owner wants to sell shares to a third party. Candidates would be other industry companies looking for synergy and scale through acquisition, or private equity companies looking to buy net income and potential scalability through growth. 

The business can be white collar or blue collar; product based or service based. The key factors are 

• whether today’s leading management wants to retire, 
• is there a succession party desiring to assume management, 
• can successful retirement be structured using a combination of the company and the buyer financial capacities. 

Company founders can benefit from succession planning when they want to monetize their retirement and ensure robust continuity of the company in the hands of successive management. 

When succession planning should be considered

A company is 20-40 years old

Leading management are founders or second generation

Leading management wants to retire

The company has $5,000,000 to $100,000,000 annual turnover

The company generates roughly 10% net profit

What is our approach? 

Our approach with clients is to meet with company leading management, and to listen carefully as they discuss all objectives. 

We want to learn about the person or people retiring and the respective positions for succession. We want to find out all their company duties, and all the reports being made up to them. 

We would analyze the activities and resource relationships now being executed and maintained by leading management. We would analyze the experience and resource relationships of potential transition successors. We would recommend a plan for training up and mentoring the succession team over time so that succession can happen seamlessly at the desired time. We would monitor the readiness of rising talent at milestone intervals.

We want to learn about potential succession parties. Is it one or more people? Are they now minority shareholders acting in management roles? Are they family, or employees, or are they a third party outside investor? In a succession event, what percentage of shares will trade hands, from whom and to whom?

We want to learn about the company attributes, going beyond a discovery of SWOT, to learn of aspirations and results, responsiveness to challenges, improvements identified that need to be made, effectiveness in making improvements, all within a context of political, economic, social, technological, legal, and environmental externalities. 

We want to learn about the company financials, its market space and customer base, and how succession could be structured in an internal family or employee group buy-sell agreement.

What about outside sale to a third party?

If company owners want to sell to a third party, we would discuss the details of business valuation factors, and review potential acquirer candidates. We would go over everything that would be involved in developing a prospectus, and how we would identify and approach candidates to bring a sale for the owners.