Pride. Accomplishment. Fulfillment. Anyone who has built a successful operation from the ground up is familiar with those emotions. However, that affinity for the organization can cloud judgment when the time comes to move on. Specifically, the act of creating a succession plan because it drives home the reality that a meaningful phase is coming to a close.

Still, a succession plan is one of the most important contributions that a leader can make at any point of their tenure. A good plan cements their legacy while simultaneously laying the foundations of future success.

Naming Successors

A successful leadership transition can only occur when there is a clear plan for every element it entails. This is especially crucial in companies where the outgoing leader has been wearing several hats. Even if they haven’t, their familiarity and experience work as a glue that keeps everything functioning as it should.

As you eye your exit, deliberate on the possible successors for all your roles. There may not be a single individual with all the traits and capabilities to take up the slack. Instead, you may have to identify several people to take ownership of particular operations.

The matter can be both simplified and complicated in family-run businesses. Simple because there is already an established hierarchy, and problematic if those individuals lack the full skillset required of them. In the latter case, bringing in someone from outside the company can be a viable option.

Divesting Financially

Selling a business is complicated and can involve an extensive and extended roadmap. Timing is everything. You will have to evaluate:

  • Industry position. Is it doing well or floundering? How are short-term issues such as Covid and long-term variables impacting the field?
  • Company position. Is the organization seen as a leader or just another player? Where do revenue and EBITDA (earnings before interest, taxes, depreciation, and amortization) stand?
  • Leadership. How are the anointed successors perceived by others within and outside the company?

Sealing the Deal

Those three considerations will give you a relatively accurate idea of market worth. Then, there are the decisions for the actual sale itself.

How to Sell

  • Broker or self. Brokers can take up to 10% of the sale price but can greatly simplify and accelerate the process.
  • Auction. Can help to seal higher prices and generate interest but may also require you to divulge additional information to third parties.

To Whom to Sell

Identify prospective suitors, including businesses looking to expand, individual investors, and investment firms. Create a prospectus with relevant information and forward it to interested parties. (You may want to include a nondisclosure agreement before divulging the information within)

Final Steps

Nothing is certain until the ink is dry on the contract. Ensure that your team is performing its role as before to keep operations running and revenue flowing smoothly.