Succession Planning for Charlotte Business Owners

Exit Planning Institute research found that roughly three out of four owners have no formal exit plan. If you are one to five years from stepping away, you still have time to choose how it ends.

Every Owner Leaves One of Three Ways

Someday you will stop running this company. When that day comes, it will happen in one of three ways, whether you plan it or not.

1. Sell to an outside buyer. A competitor, a private equity group or an individual who wants to own a company.
2. Transfer it inside. Hand it to a son or daughter, sell to a manager or set up a sale to your employees.
3. Wind it down. Stop taking new work, sell off the equipment and close the doors.

A wind down usually returns the least. You collect the value of your trucks and inventory and leave behind the years of goodwill you built.

Outside Buyers Usually Pay the Most

Family members and employees often love the business. What they rarely have is the cash to pay full value for it, even with a bank loan behind them.

That gap usually gets closed by the owner. You accept a lower price, carry a long note or both. Your retirement then depends on how well the next generation runs things.

Around Charlotte, outside buyers include private equity groups, larger competitors expanding into the region and individuals buying with SBA loans.

An outside buyer brings outside money. When several of them compete, the price reflects what the market will bear. Our page on selling a business in Charlotte shows how that process runs.

Family handoffs can still be the right call. Just go in with clear eyes. They can strain relationships, and they work best when roles, price and timing are written down early.

Your Price Depends on How Much You Are Needed

Buyers pay most for a company that runs without its owner. A simple test is whether you could take two weeks off without the phone ringing. Think about it in three parts.

People

Is there a manager or small team who could run the day? Do customers know your staff, or only you? Start handing off relationships now so they transfer when you go.

Profit

Buyers pay for earnings they can verify. Clean up personal expenses, report every dollar and keep sales steady. Profit you can prove is worth several times profit you cannot.

Process

If the way you quote, schedule or bill lives only in your head, write it down. Documented systems tell a buyer the company will keep working after you leave.

Fix the Problems Buyers Look Back For

Buyers usually study several years of history. That is why a three to five year runway matters. Some fixes take that long to show up in the numbers.

• Spread revenue so no single account carries the company
• Get key customers on written contracts
• Put a lease in place at market rent if you own the building
• Document any minority ownership you have promised a manager
• Talk to a CPA about entity structure and taxes on a future sale

Our guide on customer concentration covers the first item in detail.

Keep Your Staff in the Loop at the Right Time

Most owners worry that word of a sale will send good people out the door. That worry is fair, which is why a sale stays confidential until it is close to done.

Planning is different from selling, though. You can tell a key manager you are building a company that lasts beyond you without saying you are selling. Many staff hear that as security.

When a deal is real, the message is continuity. A new owner needs your team as much as you did, and many deals include a plan to keep them in place.

Waiting for a Better Market Rarely Pays

Valuation multiples tend to move slowly. Owners who wait for a hot market often find the same number a year later, only now they are a year more tired.

What does move your price is the work above. Better people, cleaner profit and written processes raise the multiple a buyer will pay. Start with a free valuation to see where you stand today.

Fill out the valuation form or call (704) 555-0187. A planning conversation is free and private.