Succession Planning and Exit Strategy

Who’s taking over from you?

Are you one of the many who have been considering exiting your business within the next five years?

Many New Zealand privately owned businesses are owned by Baby Boomers, those born in the period 1946 through to 1964. Many of these business owners are looking to exit their businesses within the next five years as they aim to release capital and change their lifestyle.

Generation X, those in the age group of 35 to 45 year olds, who should be taking over businesses as the current Baby Boomer generation retires, are in fact fewer in number. Estimates have this deficit figure at 40 000 individuals who are required to be literate, numerate, skilled and experienced. Within this simple demographic fact lies a fundamental challenge – Who will own and operate your business as you look to change your lifestyle?

There are additional challenges; significant differences in values and beliefs between the two generations, a lack of and often access to capital within Generation X to purchase going concerns and potential disparity in required skills and competence versus available skills and competence.
These challenges have the potential to derail many profitable and privately owned businesses; yet we overlook them as world economics dominate news headlines and day to day credit realities.

However, beyond today’s challenges succession planning and exit strategies are imperative for ensuring business success, sustainability and release of equity to exiting owners.

Conversely, the next generation taking over from the Baby Boomers are looking at “wealth creation”. If they are to dedicate the next period of their life to a business, they want certainty that they too will enjoy the rewards and benefits of hard work.

A lifestyle change, retirement, releasing equity, or changing your career require planning and implementing appropriate strategies to ensure you realise your business investment, however tangibly demonstrating a business will continue to deliver growth and associated profits becomes imperative to realising a sale or transition to the new business owners.

Have you considered how you will tangibly demonstrate sustainability of your business for a potential buyer?