Retiring business owners often do not have enough information and assistance when it comes to planning their business succession. Often times owners simply wait too long to even start planning.
There are a number of succession options available to retiring owners:
- pass on the ownership to family members who are the management
- pass on the ownership to family members but retain external management
- sell the business to management
- sell the business to management/employees
- sell the business to a competitor
- wind-up the business (liquidation)
- Initial Public Offering
Our mandate at COS is to assist employers in developing a succession plan that increases the job security for employees.
COS provides information and succession guidance to retiring owners in companies with 25 or more employees who are interested in planning and implementing a management/employee buy-out.
Recent information has revealed that succession plans involving management and/or employees resulted in much higher success rates, in fact over 80% of such businesses are still operating five years later.
This is significant when compared to similar statistics for second generation businesses where only 20% are still operating five years later, third generation businesses with only 5% still operating five years later, and those that were sold to the competition where only 50% of such businesses were still operational five years later.
Reasons why retiring owners might want to consider a management/employee
buy out:
- Their financial assets are tied up in the business
- They require income on which to live and often a means to providing financial security/benefit to other family members
- There is often the lack of interest and/or capability of other family members to succeed the founder
- Owners have invested their life into their business and have a vested interest in its on-going success
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