Succession Planning Question 2: Do you plan to sell the business? If so, to whom?
Based on your personal vision and goals you may or may not have a clear idea of who will own the business when you are ready to move on. There are various possibilities, and each presents a number of issues for you to consider:
Transfer ownership to family members
Do you have children or other family involved in the business? If so, do they want to eventually own the company?
If there are multiple family members, are they able to work together and respect one another's position in the company?
Are they capable of managing the business without you?
Do you want to sell the business outright or maintain a degree of ownership?
Sell to one or more employees
Do you have key employees who have the desire and ability to take over the company?
Will they buy you out over time, or will you retain a stake in the business for yourself and/or family members?
Would you consider an ESOP (Employee Stock Ownership Plan) that transfers ownership to your employees?
Is there another company that is interested in acquiring yours to enhance its capabilities?
Would you be required to remain with the company once it is acquired? If so, how do you feel about working for someone else?
Would you, the business you built and your employees benefit from being acquired?
Would it make sense to combine your business with another?
Who would run the merged company? You or the other party?
Would you want to be part of the merged company, or move on?
If you're not selling the business to family or employees, you'll likely need a broker to shop the business to prospective buyers. Regardless, you'll want to determine the true, current value of the company and, perhaps, determine the steps you can take to maximize its value when you are ready to sell. That's the topic we'll discuss next.