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Succession advice: A word from our panellists

We recently co-hosted a business breakfast with the ICAEW. Topics covered ranged from the value of creating a ‘talent map’ to identify key team strengths and any skills gaps, to the importance of getting all the paperwork and business processes in order in advance of any purchase or sale.

Our panellists have shared their top pieces of advice for companies and management teams looking at succession.

Emma Borrington from Berry Smith LLP had some sound advice for business owners: “Plan for succession as early as you can. Running your business with a view to your future exit will ensure it is in the best possible position to enable the sale process to run smoothly and for you to achieve optimum value.”

Meanwhile Alistair Wardell from Grant Thornton had a tip for management teams looking to buy out their bosses in a management buyout (MBO): “You need to make time to work on the business and not just in the business. Great business leaders are proactive in their leadership rather than reactive to changing circumstances.”

“One of the keys to a successful MBO is achieving a balanced and sustainable funding structure to conclude the transaction,” explained Gary Partridge from Lexington Advisors. “This requires a pragmatic approach between the vendor, the Management team and the Funders to the MBO and it’s the job of an experienced financial adviser to help to bring that balance to any deal.”  

When undertaking a MBO, ensure any outstanding valuation issues are suitably resolved before completion. This way both the purchaser and vendor can feel happy that a satisfactory outcome has been achieved,” advised Stefan Marks. Stefan is the new Managing Director of Analogue & Micro, having recently completed a successful MBO. “It is always good to start a new business venture with clean slate and a positive outlook for both parties. A mutually supportive arrangement between purchaser and vendor is beneficial to the future success of the company.”

David Staziker, Investment Director for Finance Wales concluded with this advice:

“We have an aging business owner population here in Wales, with many looking to retire in the near future. Finance Wales wants to work with businesses and advisers to identify and prepare management teams to take over more businesses through succession deals and solve this challenge. We have funds available and we want to do more succession deals in Wales.”

All panellists highlighted the importance of thinking about succession as early as possible, advising a three to five year succession preparation and handover plan.