Is the succession of your business part of your superannuation plan? How prepared are you ?
With an estimated third of our population aged over 50, the focus is beginning to shift to how to extract value from businesses that have been built up over the years.
With more and more baby boomers moving out of the market, we will be able to clearly see those who are prepared command a higher price. Poor performing businesses will have some price pressure detracted from their value. Some realise they have been left with a company that is unsaleable.
This is both an opportunity and a threat. So what can you do now to help ensure a smooth transition of your business from one owner to the next?
Get some help — discuss with your advisers, you accountant, lawyer and bankers.
If someone is earmarked for the succession — do they know that? What's their financial situation? Is there a plan to help the efficiency of this process and who can support the process? Specialist services are also available.
In New Zealand we like things to move quickly but realistically a smooth transition will take time. Succession may take three to five years to do properly if you want to extract the right value from the business. How long you have to do this will affect what you can do. This is more than just a sale, it's a handover of a legacy.
Diagnose your business — it will empower you to articulate its value. It will also allow you to make operating changes to enhance its performance and value.
Doing the diagnosis earlier allows the changes to show as a sustainable difference in performance through the years you're preparing. System analysis will be a big part of this and is most likely the place to start.
Whatever you do, don't put yourself in a place where you need to react. Document and agree terms in advance, and, with a bit of planning and time, you can fulfil the retirement plans you've talked about which your family will thank you for.
Jeremy Tauri is an associate at Plus Chartered Accountants.
Phone: (09) 438 3322
Fax: 438 8455
134 Bank Street, Whangarei
If we had to sum up Brent and the team at Plus CA it would be - humorous, efficient, professional with a real focus on making your money work to its best ability for you...we will continue to deal with them even though we are moving overseas as we know they have our best interests at heart.
Jeremy thank you for your patience, assistance and general chit chat over the years. I would have absolutely no issue in recommending your services to everyone and anyone – in fact, I do.
We recently employed Jeremy Tauri of Plus Chartered Accountants and have been thrilled with the improved service we have received. Jeremy is really approachable and always available to answer queries. At his instigation we have set up quarterly meetings so that we are regularly reviewing our business and avoiding any ‘end of year surprises’.