Business transition is a significant event in a business owner’s career. To ensure a smoother process with careful consideration and planning, I want to answer some frequently asked questions about business transition and what to expect when working with me to strategize an effective business transition.
What Is a Business Transition?
A business transition changes operations and ownership for the involvement and benefit of all new stakeholders. Your transition plan ensures you complete the necessary measures to secure optimal stewardship.
Why Pursue Business Transition?
A business owner may pursue a business transition to take on a different role or exit their business. Business owners also transition to increase their financial and material resources, enter new markets, and gain more talent.
What Are the Different Types of Transitions?
External transitions – involve selling your business to an outside buyer.
- Buyers can be an individual, competitors, or investors.
- You’ll complete the sale quicker with a competitor.
- You will exit the business sooner, depending on the deal and stipulations. When completing a merger in an M&A deal, you may strategize a gradual exit based on mutual benefit and interest. In an acquisition, the organization acquiring your business determines it.
Internal transitions – involve selling or passing your business down to a family member or a chosen successor, such as an employee or manager.
- You can pass down your family business and leave a legacy.
- You can maintain the company culture, values, and mission by choosing a key employee or manager in an employee or management buyout.
- Your exit is gradual – you remain influential in the business until the successful completion of the buyout or succession with a payment plan.
What Is the Difference Between Exiting and Transitioning?
Your business exit is often immediate.
A business transition doesn’t necessarily involve your exit or your immediate exit. With a business transition, you may change from a private to a public company, merge with another company to form a new venture, become acquired by another company, or gradually transfer ownership with an employee stock ownership plan or successor.
Generally, you remain a part of the business during the transition. However, your ownership and management significantly change: it depends on the sale and agreed-upon stipulations of stakeholders over your role and how much influence you have or keep.
Should I Work With a Business Coach or Advisor For a Business Transition?
For a successful business transition, business owners should consult professionals, such as advisors, brokers, CFOS, corporate lawyers, and accountants, for financial preparedness, debt management, tax assessment, business sale negotiation, protection of your stipulations, and more.
Fortunately, as a certified exit planning advisor and business coach, I help you narrow down only the most necessary professional resources to complete a successful transition.
You can book a consultation with me today to prepare for a successful transition.
