All closely-held businesses have a life cycle and most often in the mature cycle of a business the owner[s] face the issue of whether where the business should be going is in sync with the direction that the owner wants to be going, especially as the owner approaches retirement age. All closely-held business owners should engage in a strategic planning process which identifies what should happen to the business in the future and what should happen to their ownership interests. This is the keep/sell/grow decision tree.

In order to make the best decisions about the future of the business the owner[s] should understand a variety of issues. Some of these issues include:

If one plans to keep the business and pass it down to future generations:

• Is there successor management in place?
• Does this management include members of the family and, if so, are they prepared to take over from the senior generation?
• Who among active members of the family is truly qualified to lead the company?
• What is in the best interest of the family, the business and its employees?
• Can the senior generation afford to retire?
• What is the best way to transfer ownership and what is the economic cost of doing it at the occurrence of different events—lifetime or at death?
• Is the company well positioned to succeed and prosper?

If one is planning to sell:

• When is the appropriate time to sell?
• What needs to be done to prepare the business for sale?
• Who are the target buyers?
• How does one best present the company to potential buyers?
• Who should be engaged to assist in the sale?
• What is the market for the company?
• What are the seller’s economic needs and expectations from the sale?
• Should some ownership be transferred now to direct proceeds to junior generations?

If one doesn’t know:

• What is happening in our industry and what are the trends affecting it?
• What steps need to be taken in order to prepare the company to be ideally situated if one decides to keep or sell?
• What is the time frame for a keep or sell decisions?
• If we need to grow, what is the best way to do this – acquisition, merger, internal growth; and how does one best finance such growth?

The Beringer Group has extensive experience in helping owners understand and analyze the myriad issues and considerations involved in mapping a strategic direction for the company and its owner[s]. We do not approach this analysis with a preconceived result or “product solution” and provide straightforward and objective conclusions and recommendations.