Finding a buyer

There are many ways a business can be sold or handed over. A good succession plan will take into account the makeup of the business and set out solid plans to try to make the transition as seamless as possible.

Buyers are looking for:

• a healthy financial background and strong forecasts
• an ability to operate with existing staff and clearly documented processes which don't rely on the founder for guidance

For help setting up processes visit our Steps to increase your business value page.

The Australian Institute of Business Brokers has a directory of Australian business brokers. For larger businesses that want to keep their sale process confidential, corporate advisers such as accountancy firms can make confidential approaches to a list of potential buyers and run a competitive process to sell the business.

Choosing a family member

Good communication between family members can make a family-run business a satisfying experience. It's important to have the family and all stakeholders involved in making any important decisions. This will minimise problems relating to inheritance, management and ownership. Consider having a neutral third party such as a lawyer or business adviser to oversee discussions.

Key questions to ask:

• Do candidates have the capability, acceptability, commitment, determination, skills and experience?
• Do nominated family members really want to take over or do they feel obliged to do so?
• Is someone else in the business, or even an outside manager, better placed to take over?
• Will nominating a successor create conflict in your business, perhaps between individual family members or with other employees?
• How will the family member fund the purchase? You may need to offer vendor terms to the member, or the family member may have to take up a bank loan.

There are other ways of being financially fair to your children or other relatives without involving them all in the future management of the business such as:

• taking out a life insurance policy for those who won't benefit from inheriting the business
• splitting your business' shares into two classes, giving full voting rights to your successor and restricted or non-voting rights to family members with no managerial involvement

Options for exiting your business

A non-family succession plan might involve full or part sale to minority or employee owners or might be an open-market sale.

Exit options include:

• a trade sale
• a management buy-out
• stock market floatation
• winding up the business

Your accountant or other professional adviser can give you objective advice.