Anyone who owns a privately-held company and has a family dreams about the one day their children will take it over. And the baby they started (or was passed on to them) and grew will continue to grow and flourish. Unfortunately, it isn’t happening as much as we might think…and not because of the reasons we might think are causing this trend.
M & A is the “next best option” when succession planning isn’t done.
Succession Planning takes some time and consistent effort to be successful. It doesn’t (successfully) happen overnight or quickly in most cases…it takes careful planning and execution. All too often business owners wait until it is too late to be successful and are left with only one option…to sell the business to outsiders.
This doesn’t have to be the case but it is the trend for one simple reason…the lack of planning. Why is it that so many business owners don’t plan well enough in advance to make it happen? Why is it that planning for succession seems so daunting? Why doesn’t the business owner take the necessary steps early enough to make this a “part of the business” plan every year? Why is this happening more today than ever before?
Number 1 reason…lack of guidance.
It isn’t the lack of desire by the business owner, they have plenty of desire. And they have the dreams and the vision…but it still isn’t happening. Without the foresight and planning years ahead of the transition, it is highly unlikely the business won’t see succession…it will get sold. But with the proper strategy, planning, and guidance along the way a business owner is able to stay on course and see the fruits of their efforts…succession to family members.
There was an interesting comment from an article in Chief Executive that talks specifically about the issue of increased M&A because of the lack of succession planning.
“One cause of the increased number of M&A opportunities in the lower middle market is its large population of baby boomers. The owners and CEOs of lower middle-market companies are predominately of the baby boomer generation. Now retiring, and in some cases, facing mortality, these CEOs and owners find themselves without a succession plan in place. Many do not employ a full C-Suite of executives, and their children, a generation that has embraced higher education at a larger rate than generations prior, have found their own dreams as doctors, lawyers, engineers, and more. Those that would have traditionally taken the helm when their parents and grandparents retired have no interest in running the family business.
This lack of a succession plan, coupled with impending retirement, creates an urgency for these businesses to change hands, and bodes well for investors and corporations to acquire, consolidate and grow them.”
Your Concierge CounselSM
We created “Your Concierge CounselSM” to address this very issue of “Guidance for Leaders” of privately-held businesses. We saw how badly this was lacking with the business leaders in our market and decided we could help. But whether you use our unique strategic planning process or someone else’s, just do it (as Nike used to say).
Sit down with the goal of making your dreams become reality…get a specific plan around passing your business on to someone (or group) that will keep it “in the family” and allow your baby to continue to grow and prosper well into the future. Leaving this legacy isn’t just a nice to have, it is your responsibility as a business owner if you have a family or close relatives. It isn’t as hard as you think when you start early and have a specific plan to make it happen.
If you want to learn more about how successful privately-held businesses make this work for them as part of their strategic planning process, let’s talk. I’m happy to spend some time with you and share how others have made this happen. I don’t charge a fee for this “exploratory meeting” since it is my passion as well to see your business live on. I look forward to meeting you and hearing more about your “baby.”