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5 Questions that will Help with Ownership Transition Planning

Aug 19, 2014 by Alan Taylor 0 Comments

5 questions that will help with ownership transition planning blogIt is inevitable that privately held companies will face some type of ownership transition event.  Too often business owners delay or avoid employee ownership transition planning which can result in severe consequences, including deterioration of company value and sustainability as well as family wealth and security.  Business owners should be mindful of these consequences, while also realizing that “planning” does not necessarily mean execution of a strategy today.  Also, understanding the process and alternatives available can help demystify the topic and help business owners understand the value of planning for this “once in a lifetime” event.

An important first step in the planning process is to consider specific issues related to you and your company, which can include the following:

Is price and “cash at close” the only consideration or are their other objectives equally as important?

While business owners often focus on transaction economics, it is not uncommon for business owners to place other considerations such as company legacy as an equal or more important objective.   

Do you want to remain actively involved in the business or do you want to completely “walk away”? 

Often business owners like the idea of diversifying their wealth, but at the same time want to remain involved in the business for the foreseeable future.  Having said that, many business owners nearing retirement have grown weary after surviving the “Great Recession”, and the idea of a permanent spot on the beach doesn’t sound so bad after all.

Do you have a strong management team behind you? 

This is a critical element as you evaluate options.  Regardless, development of a strong management team can increase the alternatives available while maximizing value in most any transaction.

Do you want your family to retain ownership and control? 

In evaluating this option, it is also important to objectively evaluate if there is a capable and qualified family successor who is willing to take over the family trade. 

Do you want management and/or the employees to eventually own the business?

Business owners often have an affinity to the management and employees who have helped make their company successful, and the idea of rewarding them with employee ownership while also yielding an acceptable value can be appealing. 


While this is just a short list of the many considerations that should be discussed, it may be reassuring to know there are alternatives available that can meet any business owner’s key goals and objectives.  Taking the time to consider and develop an ownership transition plan, even if it means executing that plan at some point in the future, can give business owners piece of mind that they have a strategy to capitalize on all their years of hard work and calculated risks.

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Topics: Employee Ownership

Alan Taylor
Written by Alan Taylor

A Great Game practitioner working at BKD, Alan has presented at the Gathering of Games. Alan currently leads the practice development team for BKDnext®, an intentional process designed to help business owners develop a comprehensive succession and continuity plan to achieve financial security for their businesses, their families and their futures. The unique approach and resources behind BKDnext help our clients use their time effectively and efficiently when planning for the future. Previously, Alan led the firm’s employee stock ownership plan (ESOP) advisory practice, which he continues to support. Alan has been responsible for structuring and facilitating more than 100 ESOP transactions, resulting in those companies becoming 100 percent ESOP-owned. Those transactions ranged in size from several million to several hundred million dollars in a wide range of industries. Alan also works with existing ESOPs in matters ranging from acquisition structuring to repurchase planning and analysis.

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About The Great Game of Business

Our approach to running a company was developed to help close one of the biggest gaps in business: the gap between managers and employees. We call our open-book approach The Great Game of Business. What lies at the heart of The Game is a very simple proposition: The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run and a stake in the outcome. Let us teach you how to develop a culture of ownership, where employees think, act and feel like owners.