Transferring your business before it’s too late !
Knowing when to transfer your business is crucial! There are pivotal moments in the life of a company director, such as making significant external growth or a major investment. Considering selling your company, as with the previous examples, is also a vital managerial decision.
The company’s welfare and its sustainability should be at the heart of this deliberation. The price we perceive at the end is merely the result of this management action.
The first question to address is: when should this process be initiated?
Broadly, there are two primary scenarios:
- A company director contemplates selling his business because it’s rapidly growing, its value is high, and he wishes to pivot towards other professional or personal projects. This often applies to startup founders who have successful growth and wish to capitalize on their assets.
- The second scenario, which we will focus on, involves the company director who has been a shareholder for several years and is facing certain issues:
- They wish to retire and leave the company
- They are exhausted or ill and want to exit
- They are grappling with a family or other type of blocking shareholding
- They feel overwhelmed and believe they can no longer add value to their company
Typically, the company is healthy when these problems arise.
It’s essential to understand that many business owners find themselves in the latter situation without any intention of selling their company.
Sadly, the realization of the need to set up a transfer process for the company’s obvious benefit is not a common reflex.
These businesses sometimes encounter issues that could lead to bankruptcy, much to their shareholder-manager’s surprise.
This realization is crucial because a transfer process should be undertaken under serene conditions with a healthy company.
The company director should have reliable individuals, like their lawyer, accountant, and family, around them to understand the necessity of considering a transfer process, primarily in the company’s interest.
At Actoria (https://www.actoria.fr), we regularly educate our clients on this subject.
Take, for instance, a sizable company leading in storage furniture. It was managed by an 82-year-old who had seen more than a 30% drop in turnover over ten years. Its profitability was significantly affected in the last decade, and the company’s cash flow was predominantly used to finance successive redundancy plans.
The realization of initiating a transfer process is not always automatic.
Sometimes, the company head struggles to separate their roles as a shareholder and a manager. They cannot envision their company’s future without them.
This behavior can sometimes result in a form of blindness that, if not confronted by external perspectives, can lead the company into difficulties.