Helping exiting private company owners and businesses prepare for and execute their transitions

The process of transitioning a private company is easily the most complex issue facing owners. For many, it is the largest and most important transaction they may ever be involved with.

Studies have shown that as many as 75 percent of transitions do not meet the owner’s goals. In many cases, this high level of dissatisfaction is caused by two issues. First, the owner approaches a very complex set of issues too narrowly by focusing only on the price. Second, the owner does not adequately plan for their transition from a business or financial standpoint, and so they are not prepared when the time is right.

At Kreischer Miller, we have significant experience helping private company owners achieve their transition goals by addressing three important processes:

  1. Business Readiness – Preparing the business from a leadership succession as well as from a financial standpoint. This process often involves changing the governance structure and improving processes and accountability so the business is prepared to function in the future without the current CEO/owner.
  2. Owner Financial Readiness – Helping the owner understand their personal financial picture now and in future retirement are key to the transition.
  3. Owner Mental Readiness – This is often the toughest part of a transition because the owner needs to be clear about their next-stage goals and to what extent they will be involved in the business on an ongoing basis. This does not necessarily mean a complete separation from the business, but it does involve a change in roles, which takes time to consider.

One of the most important parts of our process is helping the exiting owner identify their motives for the transition, which will dictate which transfer channel is the best fit for the company. Ultimately this will be a transaction that best meets the owner’s objectives. While it can take many forms, the execution of the strategy typically takes one of these paths:

  1. Outside sale to a third party
  2. Inside sale to next generation family members
  3. Inside sale to non-family business partners
  4. Transfer to family members via gifting and estate planning
  5. Inside sale to employees or an ESOP
  6. Retaining ownership as a family legacy asset

The right transfer strategy for each company is different, based on the owner’s goals and the economics.

At Kreischer Miller, we have conducted dozens of private company transitions and offer a full complement of resources including valuation, deal structuring, financing, estate planning, and governance to take the transition from start to finish.