Small business succession and sale

How we help orchestrate the frequently complex process

Written by Alison Plaxin
March 30, 2017

For just about as long as we have existed as a wealth advisory practice, The Funke Group has been helping small businesses orchestrate the – frequently complex – process of business succession and sale.

The most important financial decision

In our experience, most business owners agree that founding their company was the most important financial decision they ever made. The next most important decision to make? Disposing of it.

Business owners spend a significant amount of time and resources building and growing their company. With so much invested in the business and so much at stake, succession planning should be at the top of every business owner’s mind. However, less than half of business owners actually have a written succession plan, and some sources put the percentage at even lower than that.

Sooner rather than later

Succession planning involves preparation for the sale or transition of a business when the founder is ready to retire or exit the business. Planning for that eventuality can be an overwhelming process. It is a process that includes a review of the current state (share ownership, tax efficiency, risk management, estate distribution) and exploring options so that you can make better and more tax-efficient exit decisions.

The best time to develop a succession plan is before you actually plan to exit the business. The exit strategy will focus on extracting the highest value from the sale. An up-to-date succession plan detailing the opportunity for new buyers will support – and potentially increase – any valuations put on the business by its current ownership.

It’s about value

Assessing the value of a company is tricky. The seller is looking to maximize revenue, the buyer to minimize outlay. A succession plan will identify the key drivers of growth, assess future conditions, and provide a structure to support a more accurate estimate for the value of the company.

A company, especially one that is family owned, can represent more than half of the value of it’s owners estate at the time that owner decides to dispose of it. The advantage of using the divestible assets held within a company can be huge – huge in retirement and tax savings, in family financial security, and personal peace of mind.

A durable business legacy

We have the expertise to help you navigate an orderly path through the many seen and unseen obstacles associated with a business in transition. We can advise you about how to organize your company for sale to a third party, transfer it to family members, or structure a management buy-out. You have worked hard to create a durable business legacy. We can help you preserve, protect and maximize the value of what you have taken so much effort to build.

Geoff Funke, Senior Wealth Advisor, Scotia Wealth Management, 604.535.4721.