In the current edition of “Company Director” (April 2011), Tony Featherstone has written an article about succession and exit strategies for business (p.10). In the article he cites a KPMG report on family business which seems to hold that succession and exit are “out of sight and out of mind” for many business owners.
In the article, he also provides information relating to the views of advisers and business brokers that:
…there could be a glut of small enterprises offered for sale in the second half of this decade. By 2015, the first of the baby boomers (born between 1946 and 1961) will be 69. If their Generation Y children are not interested in taking the reins, they will be forced to sell the business on the market, or just close it.”
This poses business owners (and their families) a very interesting question – what do you want to do? If you’re wanting to pass the business “down the line”, are the people you’re wanting to pass it to interested or capable of taking over from you? The other issue is – what do you want to receive for the exit? Many families have their wealth tied up in their businesses and they can find it difficult to pay out the founder to allow them a “retirement” fund without placing a significant financial burden on the next generation taking the business over.
There are a raft of other issues that need to be addressed as part of the exit/succession plan and a well run and managed business needs to regularly review and assess their position.