Louise Fisher and Simon Everingham
At Baxendale we have over 20 years’ experience of helping businesses and their owners navigate successful transitions in ownership and leadership of their businesses.
There are a number of succession options available to private businesses in the UK. In our experience, a one-size-fits-all approach to business succession is often unhelpful as every business and business owner is different. We have learned that that the most successful succession transitions occur when business owners have had an opportunity to explore and appraise all of the succession options available to them. Only then can a bespoke succession plan be prepared that meets the individual needs and objectives of exiting owners and their businesses.
We have found that the following five succession objectives are often of fundamental importance to exiting business owners:
Objective 1: Ensuring that the business continues to be sustainable in the future.
Objective 2: Preserving the business legacy which can include the name above the door, the reputation that has built up over the years and the way the company carries on its business.
Objective 3: Receiving a fair return on the time, energy and money that owners have invested in the business over the years, in a way that allows the business to remain viable.
Objective 4: Protecting employees’ jobs, many of whom will have played a significant role in the business’ success.
Objective 5: Supporting the local community, particularly in smaller communities where local businesses can employ a substantial portion of people in the area and play an important role in community life.
We recognise that these five succession objectives will not be appropriate for all businesses. For example, if maximising the return on an owner’s investment in the business is a primary goal and continuity of the business and preserving the business legacy are of lesser importance, it may be that exploring a trade sale, private equity investment or public flotation of shares would be more appropriate.
However, if some or all of the five succession objectives outlined above are important, there are three succession options that we suggest business owners should consider. We will explore these three succession options and explain why they should be considered by business owners in part 2 of this article – look out for it being published on Tuesday 4th May.