Gregory Carroll
As a business entrepreneur, the transition of your ownership is probably the most important business process and decision that you will make in your career. You have put your life into building and growing your company. Planning for the future is invaluable and one way to protect your company is to determine the most appropriate strategy for you and your business.
From a commercial bank’s perspective, we share very similar issues, thoughts, and ideas on the owner’s business transition. The ownership transition process happens to every business at some point in time. The bank wants to keep its client, maintain the relationship, and grow successfully with the new ownership team. The commercial bank will typically want to assist in the financing of the transition and work with the appropriate parties on the lending terms, covenants, ratios, collateral, etc. It’s important not only to successfully finance the transition but also to leave room for growth capital.
The key issues are planning and having the right team around you. And while it may be easy to delay or put off the process, the business owner should also be aware of the unexpected issues that can cause an owner to accelerate the process. These issues are known as the “5 D’s” and are listed as follows:
The idea of exiting your business can be daunting and overwhelming, as well as emotional. That’s why it is important to take control now of your transition plan and work with your CPA, Attorney, Financial Advisors, Bank, and Insurance Agent as a team well in advance of your retirement or any of the 5 D’s.
Lastly, the business owner should work with his/her team to learn 1) what my business is worth; 2) What are the options for an Exit Strategy; 3) What timing should I consider for my succession plan; and 4) What does life look like for me after the sale of my company?
