How many times have we seen this?

We meet a new client who is desperate to deal with succession.  The business may have been once great, but time, technology, competition and imports have all taken a toll.  It is no longer fun.

Sometimes circumstances are so serious that the business is losing clients and more sales every year.  Profit has disappeared and often is really a loss. This fact is often hidden as the business is not paying the owner a proper salary or paying rent for internally owned premises.

Frankly, things are bad.  No wonder the owner wants out!

But the sad part is that succession is not a quick fix.  Firstly, the business is probably worth very little.  Far from the dreams of sunlit shores in retirement… this is reality at its toughest.  Without a strong business, no-one will pay more than a fire sale value.  Who would want to take over the reins of an under performing business?  Particularly if heading towards an uncertain future.

In these cases, succession takes a different direction.  Our strategy is generally to identify, plan and hopefully fix the underlying problems, get the sales back on track and restore profitability.  After that, we implement these measures that make the business more attractive and saleable, such as reducing its owner-dependency.  They get to play golf and go away for longer periods knowing that the business is properly managed.  A future owner also needs to be sure that the business can be properly run without the old owner there.

You guessed it!  After a few years, these businesses have usually turned the corner and the owner is enjoying good earnings and a good lifestyle.

“So we guess it’s now a good time sell… there is real value here” we say.  “Not likely, this is what I always wanted” replies our owner!

But of course, they still need that succession plan.