AMA: I'm Darren Smith and I've just implemented a business succession plan, Ask Me Anything!

Got a burning question? Join me here on Friday 21st June from 11am to 11:30am.

Having recently sold my award-winning financial planning practice last year and now working as a business coach at Slipstream Group, I'm here to answer all your business transition questions.

Start posting them below and Ask Me Anything!

Update: This AMA has now ended but please continue to pop your questions in the discussion forums and make sure you tag me at @Darren.Smith

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Comments

rainier.reyes

Welcome everyone to an Advisely Ask Me Anything (AMA) thread!

Here's how to get involved:

Submit Your Questions: Just type them out and post now ahead of the AMA! This is a text-based event, so no audio or video needed. Whatever questions you have, Darren will be here to answer during the scheduled time.
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Looking forward to all your amazing questions and let the asking begin!

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jbrown

Hi @Darren.Smith I'd love to know what you would do differently if you had your time over again.
Along with what worked really well for you.

conrad

@Darren.Smith given your recent experience in successfully selling your award-winning practice, what are the key factors you believe are essential in preparing a business for a smooth and profitable succession? Additionally, what common pitfalls should be avoided during this transition period?

alex.burke

@Darren.Smith , what would you say are the most important characteristics to consider when it comes to the ideal counterparty in a transition like this? I'm guessing there are both tangible and intangible factors. But what would make you see one as more suitable than the other?

rainier.reyes

In yesterday’s Advisely webinar with @anne.graham @Tamara.Morey @rod @alexander.klomp, there was a great discussion about getting team buy-in on timeframes for delivery and some of the challenges associated with it.

So with something as massive as a business transition, I wanted to know did you encounter any difficulty with getting everyone in the team on board? And if so, how did you manage it?

primrose.foster

What is one of your top tips for ensuring a smooth business transition? @Darren.Smith

smithdarren24

A great point Rainier
Time is certainly one of the key constraints in any succession process
We always had our plan as preparing the business and team for a trade sale given our size . So the focus primarily was always on improving the business to make it more attractive for a potential purchaser, so our business was ready . In terms of being able to communicate when the potential transaction was starting off we had restrictions as one of the parties was a listed entity. This was problematic as there was only a small inside circle until it was announced .
We had a challenging 7 week period where a lot was happening but we could not say anything .

smithdarren24

@jenny.brown

Thank you for the question

What would you do differently

Personally I don’t tend to spend too much time looking backwards in the rear view mirror and what I could have done differently.

In terms of the succession event and process there is nothing I would do differently; it was very quick and it was respectful. We had been preparing for it to happen at some point but the opportunity arose and we embraced it. Probably the bit I was a little underprepared for was the emotional rollercoaster which was compounded by the speed of opportunity to execution.

Similarly with the business in the lead up, we had spent considerably focus on building a stronger and more profitable business. We knew that if we remained focused on building a strong business and…… delivered value to the clients that we looked after that we would have something that was attractive to many.

In hindsight we certainly were focused on the right things, the question I have asked myself is whether we could have embedded some of the changes more quickly. The short answer is yes, particularly around business efficiency.

What worked well

The business was ready and I was personally ready
The business was in good shape and attractive to many potential buyers
The business was well regarded and we were proud of what we had jointly created
Facilitated a great outcome for all stakeholders involved: business owners, staff, clients and the purchaser.
We had nutured a potential acquiror over many years and created an environment of advocacy and respect
We had progressively evolved the business and focused on building a strong culture and team which survived beyond me.

smithdarren24

Certainly! Succession planning is crucial for ensuring a smooth transition in business ownership whether than be internally or externally through a trade sale.

@conrad

Some key factors to consider when preparing for a profitable succession:

3 major considerations normally – Time / People /Finances

Begin succession planning well in advance. Don’t wait until the last minute.
Understand and document what the business is looking to achieve and also how this interacts with what the business owners' goals are.
Build strong foundations in your business and always look for improvement

You want to make your business as attractive as you can to any potential purchaser. That doesn’t mean being ready to sell straight away, but you are constantly refining your offering, your operational processes and your client engagement to put you in the strongest position possible. You are also setting the business up to run well even when you are not there. Having the right team in place with aligned values is a core pillar.

4. Engage senior leaders in the process.

5 .Assess Current Talent: Identify potential successors within your organization. Assess their readiness and potential for leadership roles

6 Assess other Options and have a plan A, B and sometimes c

7 Invest in Professional Development: Provide training and development opportunities to groom future leaders

8 Consider Emotional Impact: Succession can be emotionally charged. Acknowledge feelings and provide support to those affected

Common Pitfalls to Avoid:

Lack of preparation and not allowing enough time
Poor communication
Neglecting Succession Planning: Don’t postpone discussions about roles and successors. Waiting until a significant event can lead to confusion and conflict
Keeping Succession Plans Secret: Transparency is crucial for a smooth transition.
Trying to do it yourself when you don’t have experience …Not involving trusted professionals like advisers, lawyers, accountants or coaches
Losing sight of impact on clients and the team
Unrealistic expectations or having a 5 year plan that is always 5 years off…
Cultural misalignment

smithdarren24

@alex.burke you are spot on in that you need to spend time understanding the various characteristics of any transaction. As we were selling the whole business we needed to ensure that cultural alignment was high as were passing over guardianship of 1400 plus clients and 30 plus team members... Given our strong connection with the purchaser over an 8 year period and involving some of their leadership team on our board by invitation we were well placed to assess this alignment. You dont always get this luxury in an external sale event as it is time pressured. The more tangible factors were financial capacity, and operational capacity to integrate the business.

smithdarren24

@Primrose-G another great question which have touched on above in an earlier question. I am going to cheat a little and perhaps focus on 2 points, The preparation in advance is what facilitated the smooth transition. Doing some of the pre thinking, structuring and planning as well as preparing emotionally without the time pressure of the transition is so important

Keeping emotions in order during the transition is also important which really is aided by effective communication between the parties. Even though our transaction only took 7 weeks from approach to announcement there were lots of questions asked about the business and what it had achieved or built. With these probing questions it is hard not to get the arches up and get defensive. The reality is it is just part of the process of discovery. I think you also find that in absence of communication it is easy for either side to read into silence motives etc that may or may not be there. Even with the most trusted parties absence of communication creates a space for people to fill in gaps on motive. So short answer is keep communication up throughout both internally where you can and also externally with the purchasers.