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Succession or exit

Start your business

Considerations for business owners

It’s one of the most important considerations for anyone who owns or runs a business and is often top of mind for our clients.

The first big decision is whether you want to sell your business or set up a succession plan. There are a range of options available, each suited to a different set of circumstances.

A successful business exit doesn’t happen overnight.

The most important point is, whether sale, succession, or somewhere in-between, exiting a business should be a carefully planned and controlled process. This will ensure the best possible outcome for the owner and their family, but also for business partners, management, employees and customers.

 

 

Selling your business

Most business owners dream of the day when an email pings into their inbox offering a truckload of cash to buy their business. Unfortunately, it rarely happens that way. Most successful business sales are the result of careful long-term planning and preparation. These are some of the most important factors to consider:

 

 

Selling your business

Equity

What type of sale?

Taxation and wealth management

Timing

Equity

The new equity structure is likely to be one of your primary considerations. You may like to retain a minority shareholding or transition out of the business entirely. Other shareholders will also need to be consulted and managed carefully.

What type of sale?

Trade sale, management buy-in / buy-out, initial public offering (IPO), private equity, gift or liquidation? A trade sale is often the best option as it’s simple, effective and almost invariably gets the highest price. Other forms of sale have other advantages and we will work out which best suits your circumstances.

Taxation and wealth management

This is likely to be the biggest single injection of capital you will ever see. We will work with you to minimise Capital Gains Tax and other costs and maximise the boost to your long-term wealth.

Timing

We will work with you to decide the optimal timeframe to sell your business. A crucial part of this is maximising the value of your business, but it will also depend on the health and level of competition in your industry. A more gradual exit from the business may make your customers and employees more comfortable.

 

 

Succession planning

We have seen the gradual decline, over many years, of business owners passing the family business to their children. These days, in our experience, less than 1 in 10 private businesses are passed to children and if they are, they’re usually sold rather than gifted.

However, while family succession is rare, senior management taking over a business is very common and often a great option. We work with business owners to improve the success of the handover through sound financial management, careful planning and business coaching.

 

 

Succession planning

Transition

Strategic timing

Family

Getting out of the way

Transition

A successful transition to new owners usually takes quite a long time, months if not years. Even longer if they need upskilling in your industry or in managing a business. There could also be training or coaching requirements to consider. We have extensive experience in making transitions work for both parties.

Strategic timing

We work with you to carefully plan the gradual handover of the business so you can leave it in good health and set up for future success. The timing and pace of transition generally hinge on how ready the future owners are to manage the business (from a wealth and skills perspective) as well as the circumstances of your exit.

Family

If you are selling your business, or gifting it to a member of your family then this requires a different lens, particularly with taxation and business structuring. Even if the new owners are not family, you or some of your family members may retain some equity, or an ongoing role in the company.

Getting out of the way

One of the biggest hurdles to a successful sale or succession is managing the owner’s exit. Often the founders and/or owners are so tied to the business that it takes years of careful planning and management to remove the firms’ dependence on the owner. We have successfully worked with founders on this issue many times.

 

 

Valuation

How much is your business worth? It’s a difficult question and there is no easy answer. Ultimately, it’s worth whatever someone is prepared to pay. We have a tried and tested framework, which draws on our knowledge of your industry and similar sales, to estimate the value of your business.

We focus on the real drivers of business value and how we can use these to greatly increase the sale price of your business. This often takes several years and can change the timeframe we recommend for your business exit.

 

 

Valuation

Profit

Customers and supplies

Risk

Competition

Profit

Value starts here. We will get a full understanding of your costs, sales volume, pricing policy, margins and overheads to suggest ways of improving profit and so increasing your business’ value.

Customers and supplies

An over-dependence on key customers or suppliers is one thing which can drive down valuations and scare off potential buyers. We will work with you to diversify your key relationships to reduce risk.

Risk

Good financial controls and thorough risk management procedures are a basic, but important step in readying your business for sale. We look at factors like data protection, regulation, debt and how well protected both business and owner assets are.

Competition

How well differentiated is your business? How difficult is it to copy or compete with? We look at processes, intellectual property (IP), culture, markets, products, quality, size, location, technology, brand, patents, efficiency, access to products or customers and barriers to entry as a way to protect and enhance the value of your business.

Michael.Sutherland-2_WEB.jpg
Michael Sutherland
BBus (Acc), CA, CTA, RG146, FBA, Specialist Accredited Advisor
Lead Partner
03 9611 6733
Contact me
Richard.vanderMerwe-2_WEB.jpg
Richard van der Merwe
BBus, FCA, FBA, Specialist Accredited Adviser
Lead Partner
03 9611 6066
Contact me
David%20Buckley.jpg
David Buckley
BCom (Acc & Econ), CA, DFS (FP)
Partner
03 9611 6601
Contact me
Bernie.Morris-2_WEB.jpg
Bernie Morris
BCom (Acc & Fin) CA
Partner
03 9611 6088
Contact me
Michael Sutherland
Michael.Sutherland-2_WEB.jpg

Michael Sutherland

BBus (Acc), CA, CTA, RG146, FBA, Specialist Accredited Advisor Lead Partner
Phone 03 9611 6733
Bio

Michael joined Fordham in 2001 and is now the lead partner of a team of 30 with clients in Property & Construction, Retail/Ragtrade, Transport, Manufacturing and Franchising. He started his career in 1991 with one of the Big Four accounting firms and joined Fordham 10 years later to focus specifically on medium-sized, privately-owned businesses.

As a Chartered Tax Advisor with a wealth of experience in corporate advisory, as well as private businesses, Michael brings this unique perspective to help his clients’ businesses grow and overcome adversity. He helps clients across the broad range of business and personal issues they face including arranging external financing, modelling/forecasting, reporting, shareholder issues, structuring and valuations.

In this role Michael enjoys undertaking strategic planning for his clients and often participates as Board Chair. He runs executive leadership team meetings focused on driving accountability and meaningful improvements to operational performance. He is a regular presenter and author of industry articles for the building and property development sector, as well as Ragtrade industry segments. When not at work, he is chauffeuring four daughters to school, rep basketball and football.

Industry specialisation: Property & Construction, Retail, Manufacturing, Transport, Franchising

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Richard van der Merwe
Richard.vanderMerwe-2_WEB.jpg

Richard van der Merwe

BBus, FCA, FBA, Specialist Accredited Adviser Lead Partner
Phone 03 9611 6066
Bio

Commenced with Fordham in 1984 as a graduate and progressed to partner level in 1997

Richard’s diverse background equips him to manage the varied needs of his large portfolio of private business clients; from valuations and sales, to taxation and superannuation planning. He has had significant exposure to capital markets, including purchase and acquisition, mergers, valuations, capital raisings, finance and sale of business. He has also been heavily involved in helping clients with succession planning, including exiting via the sale of their business.

Richard has a depth of experience in helping clients manage the transition of their wealth from the business to life beyond the business, including the setup of a family office and is a trusted adviser to families over multiple generations.

Responsible, insightful and understanding, Richard is an important asset to Fordham and his clients.

Industry specialisation: Private businesses, their owners and wealthy families

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David Buckley
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David Buckley

BCom (Acc & Econ), CA, DFS (FP) Partner
Phone 03 9611 6601
Bio

David joined Fordham as a graduate in 1982. In his early years the practice was built on a foundation of providing high level tax and accounting advice for business owners and individuals. Over the years, these services have significantly evolved due in part to significant changes in taxation law and clients’ need for high-level strategic advice.

David has a wealth of experience in buying and selling businesses, valuations, benchmarking, business analysis, systems improvement, finance proposals, GST and business and taxation structuring. This specialist understanding makes David much sought-after by Fordham’s clients.

David has also played a large part in the launch and success of Fordham’s motor dealer advisory group. In collaboration with his fellow partners, David has significantly grown Fordham’s motor dealer client base and broadened the scope of its services to include integrated advice on all aspects of business and management.

Industry specialisation: Motor Dealer Services, Other Industries 

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Bernie Morris
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Bernie Morris

BCom (Acc & Fin) CA Partner
Phone 03 9611 6088
Bio

With over 15 years of experience in advising private business owners, Bernie has become known for providing considered and reliable advice to his business owner clients. Bernie’s Fordham journey began as a graduate and since then he has developed a proven track record of assisting his business owner clients in working through complex issues, which has propelled Bernie to the position of Associate Partner.

Bernie provides leading edge tax, accounting and business advisory services to his business owner clients and in recent years has developed a keen interest in the corporate finance space, assisting many clients from various industries in business sales, acquisitions, management buy-ins and valuations. In recognition of his passion and expertise in this area, Bernie has recently been appointed Chair of the firm’s Corporate Finance Group.

Bernie is an avid Dees fan and enjoys spending time with his young family.

Specialisation: Private business, taxation, business sales, business acquisitions, business  valuations, motor dealers

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