20
| HIRE
AND
RENTAL
NEWS
| MAY 2013
INDUSTRY IN FOCUS
Richard van der Merwe, Partner,
Fordham Business Advisors
Hey, when a business owner is in their
40
s, surely it’s way too early to even
contemplate the future of their business,
family and wealth? Too many other
demands on time and resources.
If your 50s represent your best years of
knowledge, skill, growth, reaping rewards
and being in charge, it is obviously too
early to contemplate succession. Many
business owners believe so.
Then succession planning must be
something for those in their 60s? For males
born around a century ago (1901-1910 to
be precise) the average life expectancy was
a mere 55 years. Life expectancy for males
born a century later is now around 80
years. Now, full of energy and wisdom, the
business owner has a new zest for life!
So we turn to those in their 70s and
the octogenarians. Are they ever going
to let go? Are they invincible? Do they
intend to die at their desk? Amazingly,
we meet a few who believe exactly that.
Having undertaken literally hundreds of
Succession … putting it off is much easi
er!
succession planning projects over the last
few decades, we know all of the stories,
and plenty of the excuses. Such as:
•
There is nobody who can manage this
place when I am not here.
•
I have never been healthier and I already
have insurance (of some sort).
•
Hey, who is going to take over? One of
my kids is a lawyer and not interested,
and the other one already works in the
business … and he can’t possibly do it!
•
I don’t know what my business is worth.
Who would buy it anyway?
•
Maybe I will just find someone to run it
for me and I will go off to France and
live off the dividends.
Sounds crazy but these are relatively
common statements we hear. The problem
is underlying each comment is a myriad of
complex circumstances. They form a puzzle
that often seems like spaghetti in the head
of the business owner.
So putting off any form of planning is
easy! However:
•
Owners do get sick and sometimes
suddenly die on the job (we have had a
few over the years).
•
Without a proper management structure
the business is usually hopelessly owner
dependent – this makes an otherwise
profitable business significantly lower in
value.
•
There are lots of alternate futures for
the ownership of the business, including
children, relatives, management,
competitors, trade sale or even
IPO. Finding your future owner and
grooming your business can take many
years.
Surprisingly frequently, a buyer might
just knock on your door. And you may not
be ‘investment ready’. The opportunity
may slip between your fingers if you
have not made some form of succession
planning.
Naturally, we encourage all of our
business owner clients to take succession
planning seriously. Ironically, the side
benefits on the business performance,
profitability, accumulation of wealth and
improved lifestyle can be a very pleasant
outcome.
Contact 03 9611 6066 or visit website:
www.fordhamgroup.com.au
HR
1800 800 878
l
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