Why selling your business may be the key to a successful succession plan | Orlando Business Journal

A physician passed away at an early age in the middle of the night. His spouse frantically tried to find another physician to cover the patients and possibly purchase the practice, but was unable to transition the business. In the end, the widow had nothing to sell.

This real-life example is why it is important for business owners to have succession planning securely in place, especially if the owner is getting close to retirement.

Succession planning is vital to the future of every company, whether it’s a large company or a small family business. In fact, succession planning usually goes unaddressed by business owners, and as today’s baby boomers are approaching retirement, a formal succession plan is critical to ensuring that ownership of a company passes smoothly when the owner leaves and preserves the stability of the business.

Here is the main question:  If the business owner or key executive becomes disabled, incapacitated or dies, has the owner groomed the next generation of management or, potentially, a new owner? Would the business survive? If the answer is no, then it may be time to consider selling the business.

An interesting statistic on family-owned businesses shows that less than a third of them are successfully transitioned to second-generation management, and less than 30 percent of those businesses are successfully transferred to the third generation.

So, if you are thinking about selling, you may assume the market will be ripe with willing buyers. If your business is unique, successful in a growing market segment or wildly profitable, that may be the case. However, if it is marginal, the opposite may be true.

Once a business owner decides to sell, he or she may want to obtain a certified business valuation from a CPA Accredited in Business Valuation (ABV) to arrive at a realistic selling price. Hiring a business broker may also be an alternative.

But prior to putting your business up for sale, it may be a good idea to consider the potential pool of buyers. Who would want to buy your business? Possibilities may include current partners, management or employees, competitors, laid-off corporate executives looking for a new career, or maybe private investors or investment boutiques with holdings in your industry segment.

Another recommendation is to sit down with your most trusted business advisers, such as attorneys, CPAs, bankers or mentors to sort through the issues. The important lesson here is not to wait until it is too late for succession planning.

Don’t put your business at risk. You have worked too hard and too long to have it simply implode, like the sole practitioner physician, for if he had a succession plan in place, he may have been able to sell the practice and receive a sizable amount of money for his heirs.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.