Steps to a successful business transition

December 13, 2016

Selling or transitioning a business is an involved process that requires both long-term planning and professional guidance to meet your goals.

You know change is inevitable, and that can include a change in business ownership. As baby boomers are reaching retirement in droves, many business owners aren’t thinking far enough into the future to successfully plan for a smooth transition.

When the time is right, wanting to sell your business under your terms is understandable. How to get there is not as easily understood. With a little planning and guidance, you can keep your options open to meet your return on investment goals and long-term vision.

Start transition planning now… long before you’re ready to sell

Enhance the value of your business far before it’s time to begin looking for a buyer or shifting ownership internally. By planning early you can arm yourself with plenty of options. The more choices you have, the more likely you’ll be able to sell under your terms. Give yourself peace of mind that when the time comes, it will be a smooth process even if the unthinkable happens. Leave your family and associates in a good position if they need to pick up the pieces. What kind of legacy do you want to leave?

Having a transition process and plan is key

Establish your transition strategies, along with their associated deadlines, to help keep you on track. Early planning allows you to explore multiple options in depth and then analyze the benefits of each to be sure you’re making the best decision for your unique situation. This applies whether you are planning to make an internal sale to family or a management team or an external sale to a financial buyer.

What steps do you need to follow to prepare for a sale under your terms?

  1. Begin the process to formalize your organizational structure. Could another owner or manager step into your shoes today if needed? Share your knowledge and decision-making processes with the right people.
  2. Evaluate your future path. How do you envision spending time after your transition? Having a sudden wealth of time can be an uncomfortable thought for a business owner who has had little time for anything but the business before. Find your purpose, whether it’s volunteering, pursuing a hobby or other way to meet your vision, personal goals and financial needs.
  3. Take a good look at your business with outside eyes. What would a potential buyer find enticing about your business? Is there a clear business model and sustainable long-term vision?
  4. Conduct a business valuation. Not only does this identify key value, it also provides a roadmap for determining priority steps you should take to enhance the value of your company.
  5. Don’t go it alone. Use a team approach to plan the sale. Having an additional perspective from an advisory committee is invaluable. It also helps keep you accountable to your project plan and timeline.
  6. Culture doesn’t quit. Don’t ignore this important piece of the process. Work to find ways to keep you culture aligned with your goals, and find ways to keep middle management engaged and on board. What is your employee engagement strategy?
  7. Separation of business and family. Don’t use the business as a family office. Along with that, pay attention to the softer side of the transition. Managing conflict is key to success in business transitions.
  8. Begin your courtship. It’s not too soon to begin establishing relationships with potential buyers.
  9. Look at your tax planning options. Consider your tax management strategies. Put those in place and structure the ownership for future sale or transfer.
  10. Continue looking to the future. This is not the time to ignore your strategic plan. Create a three-year strategic growth plan that is sustainable. Not only is it good business practice, but it will also interest potential buyers. A strategic positioning exercise can be an effective way to accomplish this.
  11. Don’t rest on your laurels. Continue with product development efforts to ensure you have a full pipeline of new products to launch at sale time.
  12. Time for a decision. Develop a confidential business report to share with potential buyers to create competition. When going the inside sale route, develop the terms of the sale agreement.

Schenck is available to help you to decide how to plan for the continuity of your business. For guidance through the transitions of your business, contact Lisa Horn at to learn more.

Adapted from an article by The SuccessCare Program.