Talk. Plan. Do.

Three ingredients for succession success

Building a business succession or exit strategy can be one of an entrepreneur’s best investments.

Happy mother daughter

In practice, traditional succession approaches can be complex.

Despite the turbulence, today may be an opportune time to begin, or revise, business succession and exit strategies so they’re right for you and those that matter to you—whatever the headlines.

“Sitting down with likely acquirers to discuss strategic opportunities returns value in spades when you’re ready to sell,” says serial entrepreneur Mert Iseri, CEO of Gepeto*. “People will be chomping at the bit to finally put a bid on the table for your company.”

Keen to make your succession a success or your exit the start of a new adventure? Read Mert’s story and watch his video to find out more here.

Whether you’re starting up, ramping up or stepping back, your entrepreneur journey will be full of challenges and opportunities. That’s why you need the expertise of the world’s leading wealth manager. Every step of the way.

Contact us to find out more about how we can help you on your entrepreneur journey.

It doesn’t pay to wait

Find out how business owners and entrepreneurs can navigate the exit and succession journey for their business, family, and financial goals and the three key ingredients to succession or exit, based on experience with entrepreneurs and founders.


Three reasons to talk about your exit or succession

1. Open communication can unite families & safeguard the business

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    of business owners have not engaged heirs in dialogue about family wealth.

Talking can help resolve reservations about passing a business to family members.

One conversation at a specific moment in time cannot address all the operational issues confronting an ever-changing business. Make it a process.

2. Talking can build financial (and family) resilience

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    of entrepreneurs worry family members would take the business in a different direction, or sell it outside the family.

Family, employees, and even whole communities often rely on your firm for their livelihoods.

Challenges during your business transition may show weaknesses in your personal and commercial finances. Talk today to help avoid future problems.

3. Talk can help founders and firms prepare for change

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    of business owners who sold wish they had spent more time preparing.

You can prepare all parties by anticipating change and communicating early to minimize the risk of key personnel loss, a disengaged workforce, or an erosion of corporate culture.

Some changes cannot be anticipated. But having a plan can provide business continuity and support your family's adaptation.

What can you do TODAY?

  1. Prepare: Before starting to talk, you should gather your thoughts and understand your own goals and preferences, potentially by scenario planning. 
  2. Be intentional: Be thoughtful as to where and when you start these focused and honest conversations.
  3. Communicate the vision: How it aligns with other key stakeholders’ goals and preserves the company’s values, culture, and market position. 
  4. Maintain open communication: Regularly communicate and update all stakeholders on the progress of the succession plans.  
  5. Seek professional guidance: Working with trusted partners who specialize in legal, tax, and financial advice can give you an objective perspective and specialized knowledge to help navigate complex issues.


Three ways planning goes beyond your business

1. A succession plan can help you spread your capital efficiently

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    of entrepreneurs have no formal exit strategy in place.

Figure out who your stakeholders are and how much they need. Collaborate with wealth planning and family advisory specialists to model potential capital needs across the family’s total wealth.

Set adjustable capital budgets for your stakeholders that can change with your needs as well as their needs and the markets’. Then build a so-called liquidity strategy so you all have the money you need, when you need it, over the next 3–5 years.

2. It can support the transition from  business owner to asset owner

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    of business owners have not identified professionals to help finalize the sale, nor have put structures in place to help minimize taxes and shield proceeds.

Succession plans with wealth planning, financial advisors, and accountants may help to clarify the post-sale outlook for your personal wealth.

Make sure you know how you’ll manage different types of assets—whether it’s a pure financial one, retained ownership stakes in your businesses, or potential cashflow from ongoing dividend or earnout provisions. And stress test your financial plan well ahead of time.

3. A succession plan can secure your firm’s sustainability

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    of business owners are worried they won't have a much of a sense of purpose when giving up ownership.

Succession and exit planning can help pass down what matters most. That might include sustainability. And your values are more likely to endure if doing good is good for business.

Look at the operating company as well as sustainable and impact investing approaches or philanthropy to address environmental and social challenges.

What can you do TODAY?

  1. Take a fresh look at your cash management strategy: You should look beyond bank deposits to include high-yield savings accounts and ladders in bonds (and Certificates of Deposit, or CDs, for US-based investors). UBS CIO recommends using a “Core-Satellite” framework to customize the investment strategy so that it aligns with the specific timing and sizing of cash flow needs.
  2. Assemble the team: With the sale of the business, the business owner may need to expand the advisory team with specialists to obtain the best result (e.g.: accountants, tax and estate attorneys, investment bankers and advisors).


Three things not to forget in the succession or exit process

1. The path from entrepreneur to wealth manager is not linear

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    of business owners who recently sold took advice from their financial advisor.

This may be particularly true in an environment like today where higher interest rates and tighter lending standards are affecting exit strategies.

Before you invest, consider how you’ll manage loss of control and mark-to-market movements in wealth, and make sure you have a liquidity strategy to fund your spending.

2. Include sustainability as part of your auction or negotiations

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    of investors want to align their investments with their values.

We see growing scope for sustainability criteria to be part of how you maximize your business value: As part of the bidding rules, especially where it’s material to your firm’s profitability; and as part of your information provision, as buyers want ever more sustainability data.

Careful work with accounting and legal partners may be necessary to ensure that minimum sustainability reporting requirements are satisfied.

3. Consider market volatility as friend and foe

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    of business owners have not identified a plan for what do to with the proceeds.

You might also consider hedge funds and private markets to manage volatility in your portfolio. Historically, analysis shows that macro hedge funds can typically find more market mispricings in higher-interest-rate environments, and when cross-asset volatility is high and varied.

Private market investments may offer some of the investment characteristics familiar to you. But they also come with drawbacks like illiquidity and the need to meet capital calls.

What can you do TODAY?

  1. Make it sustainable: Corporate sustainability not only targets environmental and societal well-being, but also can yield commercial benefits for you and your stakeholders. Read our three-step framework to a more sustainable and profitable business.
  2. Invest your lump sum: After receiving a lump sump, the first step is to devise a tailored investment plan. The Liquidity. Longevity. Legacy. Approach* is a good starting point geared toward aligning a family's assets with their financial objectives over generations. Learn our three ways to avoid the most common pitfalls.
  3. Diversify your portfolio: Diversify your business, hold enough liquidity, and don't give up on stocks are among the five tips we recommend investors to follow to achieve diversification. More here.

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