Preparing for your business transfer : 5 tips

Are you approaching your retirement and looking to hand over control of your company, whether it’s to someone close to you or a third party? To ensure your business continues after you leave, it’s important to plan for a structured takeover. Good preparation will guarantee that a competent replacement will be able to preserve your legacy. Here are a few suggestions for starting your planning process.

 

Know your business

It is essential to have a good overall understanding of your business strategy, which includes an understanding of the competition. Understanding your market and its challenges will accelerate and facilitate decision making during the transfer process.

Choose wisely

You are invested in your company and it has a positive effect on society, so it is very important that the transfer keep the company moving in the same direction. Make sure that the values of the people taking over the business are in line with yours and that their objectives will promote the continuation of the business.  Finding a partner like Desjardins Capital can help you locate the right people, since it operates within many spheres of business activity within Quebec, and can also introduce you to many potential buyers before you make your final decision.

 

 

Opt for transparency

Transparency allows you to get around a few problems related to the transfer process, the most significant being establishing the selling value of your business. You will reach an agreement on a value more easily when the business is evaluated transparently and independently by a third party operating under the terms of the Autorité des marchés financiers. The third party’s role is also to defuse tension by dealing with situations openly. For instance, if your employees’ future is an issue, the third party can rely on their experience to present positive, concrete options that will reassure all stakeholders.

Stay in control of the business

Often, transferors cannot take part in the sale process due to the buyers’ financing structure. Private funds, for example, usually take control of management to ensure the success of the transaction. However, in our experience, entrepreneurs who have a significant impact on business development will contribute to the success of the transfer by ensuring that the handover goes smoothly. Furthermore, by choosing a non-invasive financial partner, entrepreneurs who would like to hand control over to their management team can ensure they stay in control while also benefiting from a support structure that facilitates this process.

Get an outsider’s point of view

When it comes to in-family transfers, certain decisions can be hard to make because of emotional bonds within the management team. Using an external partner in these cases can make things a lot easier. Third parties are able to ask hard questions and defuse certain situations more effectively and without taking sides, which will greatly accelerate the transfer process and avoid conflict.

Regardless of the situation, business transfers are complex processes that require a lot of planning. Entrepreneurs should therefore expect a minimum planning period of five years before undertaking any such endeavour.