ECOLOGICAL SUCCESSION Primary Succession Secondary Succession Primary vs. Secondary Succession.
Your Future Beckons Succession and Exit Strategies Morgan Potter August 2012.
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Transcript of Your Future Beckons Succession and Exit Strategies Morgan Potter August 2012.
Your Future Beckons
Succession and Exit StrategiesMorgan PotterAugust 2012
Your Future Beckons
• Build the runway for your flight to freedom:• Establish a solid company reputation• Forge strong business relationships with
customers and suppliers • Train managers to become autonomous• Develop a senior management team• Create a 3-year strategic plan• Talk to Morgan Potter Consulting
Steps to Success
1. Agree Objectives • For shareholders, managers and the company
2. Review the Issues and Opportunities • Personal, company and market perspectives• Assets and liabilities• Performance targets
3. Write your Plan • Action steps, partners, timescale
Essential Elements of the Plan
1. Identifying the optimum exit route
2. Setting the succession or exit time frame
3. Resolving barriers to sale
4. Agreeing the business valuation formula
5. Creating the right management structure
6. Winning support from suppliers and customers
7. Deciding on the method, e.g. MBO, MBI, flotation, sale
8. Writing the financial plan to include payment terms, taxation and inheritance
9. Personal planning for the future
10. Negotiating the sale
Typical Barriers to Sale1. Structural Issues:
• Financial management & reports• Shareholders agreement• Tax implications
2. Operational Issues:• Organisational structure• Supplier and customer relationships• Productivity & profitability
3. Business Issues:• Plans and forecasts• Agreements and commitments• Valuation
Mission Timing
Success Criteria:• Long-term
- 3 to 5 years
• Medium-term- 2 to 3 years
• Short-term - 18 months to 2 years
Success CriteriaLong-term: 3 to 5 years -
• Company profitable with healthy margins• Products and services with long life cycles• Balanced range of customers in different
sectors• Business operating in secure, growing markets• Stable workforce• Best-practice HR policies• Loyal and capable managers• Clear vision, mission and values
Success Criteria
Medium-term: 2 to 3 years -
• All long-term requirements plus:• Secure, stable product & market strategies• Confident long-term financial forecasts• Business fully functional without the owner• Motivated, well-trained staff• High standards of efficiency• High customer satisfaction rating
Success CriteriaShort-term: 18 months to 2 years -
• All long & medium term requirements plus:• Business plan with bank support• Unanimous agreement to sell• Robust management structure• Current, audited financial reports• Research-based valuation target agreed • Key staff and customers consulted
The Flight Plan
• Assemble your team of specialist advisers• Prepare documents for due diligence • Assess risks & define negotiating position • Secure full stakeholder agreement to the plan• Investigate the tax implications• Decide how to structure the cash consideration
and other post sale issues
The Flight Check
Exit Options:
• MBO (management buy-out)• MBI (management buy-in)• IPO (initial public offering) on AIM or SE• Family succession• Business sale to venture capitalist investor • Business sale to competitor, supplier or
customer
Take Off!
• Decide on your destination
• Make arrangements for your arrival
• Release your equity from the business
• Enjoy the fruits of your success