The research tells us that most don’t have a strategy around how to do this and therefore often fail to either maximise or extract the value, or both.
Maximise the value of your business for a successful exit
Most business owners go into business planning to maximise the value of the business and extract that value (most often by selling) when they exit. But the research tells us that most don’t have a plan or strategy around how to do this and therefore often fail to either maximise or extract the value, or both.
The most recent (June 2013) MGI Australian Family and Private Business survey highlights several key statistics in relation to business owners looking at an exit:
Ownership
- 60–69 age bracket – 37%, up from 21% in 2010 (average age now 58)
Business objectives
- accumulate wealth – 55%
- pass onto next generation – 21%
- employ family members – 9%
34% do not have an adequately funded retirement plan (up from 17% in 2006)
Sale of business
- would seriously consider selling if approached – 64% of family businesses(25% have been approached in the last 12 months), 79% of nonfamily businesses
- plan to sell (now or later): 44% of family businesses, 75% of nonfamily businesses)
Of those that plan to sell
- wish to retire – 32%
- have concerns for the future – 25%
- lack of family successor – 21%
- original intention – 10%
- sale price exceeds expectations (down from 20 in 2003 and 17 in 2006) – 6%
Issues & challenges
- letting go of leadership and control – 37%
- securing adequate capital for growth and retirement – 36%
- providing liquidity for family owners to exit – 33%
- choosing a suitable ownership structure for the next generation – 33%
Succession
- NOT agreed on a proposed succession plan – 75%
- relying on sale of business for cash to fund retirement – 33%
NEXT WEEK: How to achieve the best possible exit outcomes – the 21-step process.
Craig West, CEO, Succession Plus
