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Develop a succession plan

By Geoff Ling, MBA


Private equity buyers are increasingly active in the M&A market, and they typically prefer to invest in companies where the owner is several years away from retirement age, willing to retain some equity and stay involved with the business.


For owners close to retirement age, we recommend grooming a successor to take over day-to-day management, and taking long vacations to demonstrate that the business can still prosper without them.


We have seen some savvy sellers establish residency in a low-tax state (usually Florida), partly to demonstrate detachment from the business, and partly to eliminate state taxes on the sale. Strategic buyers typically prefer to have their existing team manage the business, so a 3 – 12 month consulting role is usually fine.


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