Too many business leaders and owner managers ignore the vital need for pro-active succession planning. Unless the management infrastructure of an organisation is sound and stable, the departure of the leader, whether enforced or deliberate, threatens its viability and value.

1. YOUR BUSINESS LEGACY
Your future beckons…
start your
SUCCESSION & EXIT PLANNING
HERE & NOW!
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

2. 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 an expert adviser
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

3. 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
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

4. 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, eg. 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.
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

5. Typical barriers to sale
• Structural issues:
• financial management & reports
• shareholders agreement
• tax implications
• Operational issues:
• organisational structure
• supplier and customer relationships
• productivity & profitability
• Business issues:
• plans and forecasts
• agreements and commitments
• valuation
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

6. Mission timing
Success criteria:
• Long-term
– 3 to 5 years
• Medium-term
– 2 to 3 years
• Short-term
– 18 months to 2 years
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

7. Success criteria
• Long-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
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

8. 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
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

9. Success criteria
• Short-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
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

10. 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
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

11. 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
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk

12. Take off!
• Decide on your destination
• Make arrangements for your arrival
• Release your equity from the business
• Enjoy the fruits of your success
Written by Peter J Clark. 2012
peter.j.clark@hotmail.co.uk