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Business succession - don't make it a drama!

Succession takes many forms

We have helped a variety of businesses with succession related activities. Whether you are a business owner planning how you exit your business, handing a family business to the next generation or a leader planning employee succession there are challenges which we explore below.

The earlier that business owners consider succession and exit options the better. Clarity around the future directs many key decisions that have to be made when running an organisation. And ensuring that all shareholders are aligned to the exit route is critical, even though this may take time and tough discussions.

Family Succession

Who wants to take on the family business? What happens if there are multiple children? How do you assess objectively if they have the necessary skills? What happens if no-one wants to take it on? Perhaps external appointments would be better?

It is also important to look at how responsibility and control will be transferred and how the current owners will extract the value of their capital.

These are all challenges that family businesses face when the current leaders are looking to retire and all challenges that Delfinity can help you work through. You can read a case study here:

Preparing to sell

Sale is often the end point for a business owner - and ideally a sale that is well planned.

A leading Scottish law firm noted that around three quarters of business sales were triggered by an unsolicited approach. Whilst this sounds like good news for owners looking to sell, it's unlikely that the organisation is in the best shape to secure the best price.

When it comes to a business sale, the main options are:

  • sale to related business via a trade sale

  • sale to an investor such as a financial/private equity house

  • an initial public offering (IPO)

The sale could also be presented as a merger, either to an existing associate such as a group of employees (including a management buy-out), or to a private buyer.

Factors that have a negative impact on business value include the lack of a clear, articulated and implemented strategy. An inability to demonstrate consistent financial performance, along with complex and hard-to-unravel ownership structure with negative tax implications, are also damaging.

A strong management team is particularly important for a successful exit. Very often former owners remain tied to the business post-sale, as too much of the value of the business is wrapped around them as individuals.

This can be a very difficult time for all concerned. The former owner is no longer the decision maker and has to conform to the strategy and demands of the buyer, meanwhile the buyer can end up with an unmotivated and uncooperative key employee.

A business exit is likely to be a once-in-a-lifetime experience for most owners and it makes sense to get professional help as early as possible. By putting in place a succession plan and a strong, empowered management team, owners are more able to minimise their ongoing involvement with the business post-sale.

Succession Planning

Succession planning is a key talent management activity and essential to ensuring your business can respond to unexpected events such as long term absences or resignations.

However it is critical to make sure that your succession plan is not just names on a piece of paper.

Delfinity have a gap analysis process to ensure that individuals can develop the skills and experience they need to be ready when a succession opportunity arises. If you would like to know more contact our employee specialist, Sarah at

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