Related Topic: Family Trusts
(To view our complete archive on Succession Planning click here)
Succession is not a word that is commonly understood by everyone. It is sometimes linked with retirement and sometimes only considered as business succession between family generations
What we mean by succession
- Assisting in the transition of a business from its current owners to new ownership, and
- Maximising the value realised and capital extracted for the current owners in the transition
What is driving the succession issue
- demographics – the first of the baby boomers are approaching retirement
- market convergence
Some background to the demographic trends
- Approximately 24% of SME owners are now over 60 years of age
- another 25% are between 50 and 60
- ‘my business is my superannuation’ is becoming a reality
- their focus is on accessing the capital value of their business
CPA May 2004 Survey Findings
- Only 38% of SME owners have a succession plan
- 40% of SME’s plan to sell in the next 5 years
- 50% will rely on proceeds of the sale of their business to assist retirement
- 33% expect to have difficulty selling
Impact of the succession bubble
- An increase in number of businesses coming onto the market over 5-10 yrs.
- Polarisation between good and bad
- Good businesses will continue to sell and command their price
- Poor performing businesses will be under price pressure or unsaleable
It is against this background that YBT has structured the process of Succession Planning. We work with our Clients through all the succession planning issues , starting with when you want to exit your business, how the exit will occur, who will take the business over and what the exit value will be.
These issues, however, hide many complexities that must be considered in context of the overall plan. Our Succession Planning process guides you through these complexities in a logical format, in a series of decision making processes and action steps.
If you are considering exiting your business in the next 5 – 10 years then the time to start planning for this is now. This will make the difference between leaving on your terms – or someone else’s.
For more information and a confidential no-obligation discussion on your succession issues, contact Dave McPhedran
