website builders Everyone who commits to the work, risk, and sacrifice to build a business hopes it will last forever. Building a business that creates a legacy means the creation of value, which in turn is the dream of the entrepreneur. Yet there are many businesses - too many in fact, where little work and time goes into deciding who and how the transition in ownership of the company will be staged.
Fewer than 25% of privately held businesses have a formal transition or succession plan in place. Since most businesses are dealing with the challenges of the present day, there has historically been an aversion to the complex task of preparing in advance for sale.
The next 10 years will mark the largest transfer of wealth through business ownership changing hands the world has ever seen. Since business ownership hand offs to the next generation are decreasing, this leads us to the conclusion that new ownership structures will dominate the landscape. Businesses with a strategic plan in place will retain the greatest value for their ownership.
Privately held businesses that display professionalism and profits need the help of professional, sophisticated, and knowledgeable advisors to aid in the creation of a plan that can be managed effectively and transitioned to the successor leadership of the enterprise. An unprepared new management group, or even a poorly managed transition to competent management can cause significant loss in value. If business owners want the businesses' intrinsic value to remain intact, and to be paid for such value over time, they should engage VR to aid in the preparation of a new succession plan or the review of their existing one.
Keys to a transition or succession plan for the middle market company:
- Agreement and understanding of goals
- Family information
- Gift and estate planning
- Insurance analysis
- Investment options and advice
- Shareholder agreement
- Disability planning
- Compensation plans
- Available transfer techniques
- Assessment of business strategy
- Executive and management review
- Corporate structure
- Business valuation and market conditions
- Retirement plans