MD of Clarion Wealth Jonnie Whittle says you need to plan for a smooth ownership transition

Building a successful business demands total dedication. It becomes the owner’s sole purpose and the most meaningful way to spend their time.

A sale may result in a financial windfall but it can leave the owner facing big questions and hard decisions, while also feeling a loss of purpose.

The most successful transitions require the owner to orchestrate a finely tuned exit in order to reap the rewards and enjoy a lifestyle that is thoroughly deserved.

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Taking the time to initiate the planning process early is often neglected, a situation that can greatly affect the choices available and, ultimately, the value of a life’s work.

All in the planning

Without detailed planning, independent retailers are often forced to exit on the other people’s terms, and a transaction that should de-risk the seller’s position becomes fraught with dangers.

Fortunately, business owners do not have to carry out this process on their own. One of the keys to achieving a smooth transition is to engage early with a financial planner, who will examine business and family circumstances in great detail and help establish plans for life after the sale.

A financial planner will ask questions, agree a strategy and ensure the plan is followed, working closely with the other professionals, including solicitors and accountants, making sure everything runs as smoothly as possible in this potentially stressful period.

They will make sure the owner is in the best possible tax position which could include transferring shares to their spouse in order to maximise Entrepreneurs’ Relief from Capital Gains Tax.

Most business owners’ affairs are complex and eligibility for some tax allowances is not immediate so the longer their advisers can be given to optimise the business owner’s position the better.

Time your exit

People sell their businesses for many different reasons. A sale is not usually forced upon them, so they should only exit if and when it works for them and their families.

Life after the sale should be the time to reap the benefits of all the hard work invested into the business.

However, without a clear financial and lifelong cashflow plan the period after a sale can be difficult and uncertain.

With expert advice throughout the sale process, a clear picture of what the future will look like will become clear and having a detailed plan will ensure that nothing is left to chance.

Completing the deal marks not an uncertain ending but a purposeful, exciting beginning.