Founder of and Partner at Elsby & Co, Carl Elsby looks at management buy-outs as a route to consider when planning for the future.
Bosses who want to get the best for themselves and their companies when they sell their business should investigate employee succession plans, according to accountancy experts.
Rushden-based Elsby & Co has helped several firms to achieve successful employee succession plans – also known as management buyouts – during the past year. However, the award-winning accountancy business says that too often busy bosses fail to plan ahead when it comes to the sale of their company.
Co-founder and partner Carl Elsby said: “Most people do not plan ahead for the sale of their business then one day their hand is forced, either by unexpected circumstances or they decide they have had enough. Faced with a quick, unplanned sale, the buyers – if there are any – have the upper hand and may offer a deal that leaves business owners wondering why they spent so many years working so hard. It is far better to plan ahead, get your business ready for sale and then go through a structured sale process, hopefully getting a few people interested, so there is some competition. We have handled a number of these deals, often successfully, but it is a stressful and expensive process and these deals can fall through right at the end.”
There is another way which, in the right circumstances, can work like a dream – an employee succession plan.
“You get full value for your business, sell it to people you like and trust and in a timescale you want, plus the business you have worked so hard to create lives on,” said Carl. “Your trusted staff get to own it without borrowing any money or dipping into their savings. They start running it, allowing you to retire, they continue at the same level of earnings – plus inflation – and the surplus profits are used to fund the business purchase.”
As part of the process, the team at Elsby & Co puts together a financial plan and proposal to present to the buying team. “We have instigated several of these projects and are currently working on more,” said Carl. “Each case has gone through smoothly with no unpleasant negotiations, the seller has achieved the price they desired and all parties have been delighted with the outcomes.
“It is painless, simple and rewarding with great outcomes for everyone. If you are keen to secure your business succession plans and have trusted employees to whom you would like to pass it on, we would be delighted to chat with you about the options and to help you to plan ahead for a successful outcome.”
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