Raymond Khouri CA Limited

Succession Planning

Succession Planning and Selling Your Business - Plan for your retirement and the sale your business.

One of the most crucial decisions in the life of a business is deciding whether the business will be passed on to family members or whether the business should be sold.

Developing and implementing a well-designed plan is essential to the long term success of the business you've grown and developed from the very beginning.

One day you will need to exit the business, through retirement or sale. Succession planning covers the key steps to prepare the business for that moment.

It's important to bear this concept in mind: ultimately, for your business to truly be a realizable asset for you, you need to constantly be working on it with a view to selling it sometime in the future. Whether you do sell it or not is irrelevant, keeping that frame of mind means that at least you will always be in a position to sell it and realize it's true value, if you should ever want or need to.

That focus gives you a greater awareness of the need to systematize your business and make it less dependent on you.

People want to buy businesses that work, not businesses that are run by people that work and work and work. Succession planning then is an ongoing, ever improving process and is just as much about working ON your business as planning for the future.

Due Diligence

Regardless of whether the business will be passed on to family members or sold, the business will need a "warrant of fitness".

Due diligence is about ensuring that a purchaser is fully informed and that there will be no future unpleasant surprises. It enables the purchaser to rely on his or her own investigations, information gathered and judgment about whether or not the business is a sound investment.

This will require ensuring that business records are sufficient for the purposes of due diligence by a prospective purchaser, trustee or extended family. By anticipating the requirements of the due diligence process, the viability of a business as an attractive option for purchase or succession will be increased.

The Succession Plan

Succession planning should start up to 5 years before the business is sold. Some of the issues to be considered are:

• Review the business structure and remove non-business assets, expenditure and debt.
• Prepare documentation of your systems and procedures
• Identify and register your company's intellectual property
• Prepare and implement employment policies
• Prepare a strategic plan
• Identify and document all business relationships
• Have the business valued to obtain a realistic expectation of its current value and future possible value
• Develop strategies for profitability, growth, systems development, staffing and structure.
• Involve advisors such as accountants, lawyers, bankers and business brokers
• Prepare an information memorandum about your business to give to prospective purchasers.

We recommend that you obtain advice specific to your circumstances. Please click on Contact Us to arrange a consultation.