Succession planning - realising value

The aim of the planning and implementation process is the creation of realisable value.  It is therefore critical that at the outset of the planning process, some thought is given as to whether to objectives of the business are likely to yield realisable value.

It should be remembered that the earnings of the business value is not always reflected in the value achieved.  Market share, intellectual property, know-how, supplier/customer synergies, the elimination of competition can all have major impacts on achievable values.

Therefore when setting objectives management should be considering where and from whom value is to be derived.  What type of exit is envisaged—trade sale, buy-out, flotation?  What economic, industrial and market conditions are likely to exist at the time of exit?  What type of investor or buyer will the business attract?  What are their likely perceptions of value?

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