The ownership transfer involves several issues that must be taken into account very rapidly during the Ground Rules and Planning stage of the transfer. To help you reflect on these issues, you can ask yourself the following questions:
- Will you keep some shares in your business?
- To whom will you transfer ownership? Your children? Your employees? A third party?
- What is the real value of your business? (See the section on due diligence)
- What is the price that you are asking for your business?
- If it is a transfer within the family,
- Do you intend to give or sell shares to your children? And if so, when?
- How will you divide up the shares among your children?
- • If it is an employee buy-out,
- Which form of share transfer and ownership division would be most appropriate to maximize your interests in this transaction?
- Management buyout? Collective employee buyout?
- How will you divide up the shares among your employees?
- Which form of share transfer and ownership division would be most appropriate to maximize your interests in this transaction?
The financial, the tax, and the legal issues related to the ownership transfer will make it necessary for you to consult one or more experts because this complex process should be well thought out and planned in advance. Through their respective forms of expertise, lawyers, tax experts, financial planners, and sometimes even organizational psychologists can help facilitate an ownership transfer.
The management transfer also involves several issues that have to be taken into account very rapidly during the Ground Rules and Planning stage of the transfer. To help you examine these issues, you can reflect on the following questions:
- What type of transfer are you seeking?
- A transfer within your family? A transfer to your employee(s)? A transfer to a third party?
- How do you wish to prepare the new management team?
- At what point do you wish to leave the management of your business?
- What do you intend to do when you leave the management of your business?
You will experience this last big challenge of the management transfer when you definitely leave behind the daily management of your business. This is why it is important to reflect on and prepare yourself for your subsequent projects. For many incumbents, the management transfer is an opportunity to undertake strategic projects in the role of shareholder or president of the board of directors of the business, or to undertake new entrepreneurial projects that they have been thinking about for a long time. To develop a better understanding of the type of incumbent that you are and of the predominant issues that you will face during the management transfer, you can do the Quiz: Discover Your Incumbent Profile.
Five Key Challenges and Avenues of Reflection for Facing Them
Reference:
- Saint-Cyr, L. & Richer, F. (2003). Préparer la relève : neuf études de cas sur l’entreprise au Québec. PUM.