Exiting your Business Successfully seminar


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Resources from Business Victoria's seminar that helps you discover how to achieve maximum resale value for your business.

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Exiting your Business Successfully seminar

  2. 2. UNCLASSIFIED UNCLASSIFIED Objectives:  Evaluate your situation  Explore Succession and Exit Planning options  Learn about the benefits of planning  Find out how to develop an effective plan  Gain an understanding of the basic steps in preparing a business for sale or transfer  Understand the importance of having good advisers Your Business
  3. 3. UNCLASSIFIED UNCLASSIFIED 30% of business owners are aged 50+ CPA Small Business Succession and Exits Survey April 2004, RSM Bird Cameron (2006), Swaab (March 2006) 45%+ have no business or succession plans 50% would fund their retirement from the business sale proceeds 40% want to retire within five years Did You Know?
  4. 4. UNCLASSIFIED UNCLASSIFIED Succession Planning is a process by which successors are identified and development activities planned Types of successors Ingredients of good succession planning Process starts with evaluating your position What Is Succession Planning? Page 3
  5. 5. UNCLASSIFIED UNCLASSIFIED Why did you go into business and what did you hope to achieve? Have you achieved it? Is there anything that you would like to achieve before exiting the business? What is your preferred exit option and do you have an ideal buyer/successor? Initial Questions & Self Assessment Checklist Page 3
  6. 6. UNCLASSIFIED UNCLASSIFIED Systematic approach for someone to transition away from a business: do on own terms, not dictated by others maximise after tax dollars Should be staged Exit strategies should be included in your business plan Encompasses management succession, ownership transition planning and estate planning Exit Planning Page 6
  7. 7. UNCLASSIFIED UNCLASSIFIED difficulty delegating fear of change and identity difficulty accepting that anyone has the skills or capability to succeed them concerns about ability to maintain lifestyle fear of conflict over choice of successor concerns about treating children fairly fear of life after work poorly advised Common Reasons for Not Planning Page 7
  8. 8. UNCLASSIFIED UNCLASSIFIED reporting information systems high accumulated asset value tidy business key employees ageing awareness about planning Factors that Influence Exit Opportunities Page 9
  9. 9. UNCLASSIFIED UNCLASSIFIED Ensure economic independence Provide short- and long-term success of business Maintain family harmony Minimise taxes Gives control of the process and peace of mind More profit and higher efficiency Mitigates disruption to business if crisis occurs ie. owner becomes incapacitated or dies Exiting – Why Plan? Page 10
  10. 10. UNCLASSIFIED UNCLASSIFIED Exit planning is a process not an event Begin planning from the start of your business Otherwise prepare or revise when: you retire you restructure the business death (of spouse, beneficiary, key employee) marriage or divorce (of a child or shareholder) sale of business major change in circumstances When to Start Planning? Page 11
  11. 11. UNCLASSIFIED UNCLASSIFIED Family Employees Reviewing talent bench: assess key positions identify and assess key talent generate employee development plans monitor and review development consider contracting an HR specialist Exit and Transition Options Page 12
  12. 12. UNCLASSIFIED UNCLASSIFIED Non family Partnership Merge/consolidation More Exit and Transition Options Page 18
  13. 13. UNCLASSIFIED UNCLASSIFIED condition of plant, fittings, office machinery customer files accounting systems policies and procedures complaint handling financial accounts and financial health taxation returns litigation staffing inventory Common areas to check: What Shape is the Business in? Page 19
  14. 14. UNCLASSIFIED UNCLASSIFIED 1. Set exit objectives 2. Determine the current value 3. Make the business more valuable 4. Sell or transfer 5. Have a contingency plan 6. Preserve legacy of owner’s estate Six Exit Planning Steps Page 21
  15. 15. UNCLASSIFIED UNCLASSIFIED Three approaches: Income Asset Market Three key components to setting prices: Plant Stock Goodwill Sales statistics and industry rules of thumb Common Valuation Methods Page 24
  16. 16. UNCLASSIFIED UNCLASSIFIED Return on investment Earnings based method Cash flow method Realisation of assets Common valuation drivers How to increase business value Valuation cont. Page 26
  17. 17. UNCLASSIFIED UNCLASSIFIED Doing it alone: information stage negotiation agreement hazards of handling sale on own Using a professional adviser or broker Adviser roles and duties Options for Selling Page 32
  18. 18. UNCLASSIFIED UNCLASSIFIED Situation 1 – Family Business – manufacturer of specialty technical products (page 34 of workbook) What are the options for the parents to exit? Situation 2 – Small Service Business (page 35 of workbook) Is there any problem with this approach? Discussion of approaches and ideas Case Studies
  19. 19. UNCLASSIFIED UNCLASSIFIED Complete Personal Action Plan (page 37) Personal Action Plan
  20. 20. UNCLASSIFIED UNCLASSIFIED Business mentors help you to identify a clear direction for you and your business. Business mentors can also advise you on how to: conduct market research price and/or cost your products or services develop an effective marketing strategy use other business management tools Small Business Mentoring Service To arrange a session with a business mentor go to: www.sbms.org.au
  21. 21. UNCLASSIFIED UNCLASSIFIED Questions? Thank you for attending Visit business.vic.gov.au/events for more workshop information