Succession Planning Essentials


Succession Planning Essentials

This page was last updated on November 22, 2021
With the changes to Entrepreneur’s Relief in recent years and the pandemic’s impact on trading conditions, more business owners are considering their succession and exit plans. Our November Business Club explored the essentials that go into a successful strategy for all the parties concerned.

Tim Hardy and Catherine Metcalfe from Shipleys facilitated the discussion. To begin with, Tim shared his own experiences from merging his family business – Smith Pearman – with Shipleys in 2016. 

Getting the timing right

One of the key points Tim stressed was the importance of timing in an exit or succession strategy.  Many business owners delay their exit for personal reasons, but it’s often better to be alert to when the market conditions are right. Tim explained how the conditions in 2016 supported the family’s decision to merge, reduced risk and ultimately allowed for the business to grow as part of a bigger entity.

Act responsibly to staff

Another piece of advice Tim shared, which was given to him at the time, concerned the staff of the business.  While it is important to act responsibly to staff during a sale or merger, this is often confused by business owners with feeling responsible for employees’ lives. 

If all staff are given an opportunity of work in the new entity or merged firm, how well they make it work for themselves is ultimately down to them as individuals – not the former business owner.


When discussing succession and exit planning, business owners sometimes feel they only have a couple of options – sell or wind up the business.  There are, however, more choices.  These depend on the nature of the business and the owner’s involvement and preferences. 

Popular exit routes include:

Initial considerations

When weighing up different routes, there are some initial considerations which highlight those options better suited to the business and its owner.

To begin with it’s important to evaluate what value there is in the business, and whether it would attract a buyer.  It’s also sensible to assess the self-sufficiency of the business, for example, would the business continue to do well without the business owner?  If the business is heavily dependent on the business owner’s involvement and presence this will limit the exit options available.

Another initial consideration is whether the business owner wants the business to continue without them, or is keen to retain some control.  Some options, like Employee Ownership Trusts, still enable business owners to continue with some involvement in the business.

Succession essentials

Using two fictitious company scenarios, Business Club members discussed what they felt the business owners of those companies should consider when planning their exit strategy.

Emotional attachment

The emotional factors that business owners will encounter during the process shouldn’t be underestimated, and owners need to be ‘psychologically ready’. 

Firstly, it is important to be able to cope with the scrutiny that occurs during the necessary due diligence phase that goes with a sale.  Here it helps to find advisers who will hold the business owner’s hand and normalise the process as much as possible.

Another factor is for business owners to be ready to release control and have the right mindset for this. Having successfully grown a business over many years, the process of exiting can be tough on the business owner. Some struggle post-sale/exit and describe the period after selling as one where they experience grief and a profound sense of loss.

Gaining clarity of the value

To avoid disappointment, it helps if business owners are realistic about the true value of the business.  Sometimes owners have an inflated view of the true value, when trying to attract a buyer.  Business owners should endeavour to gain a valuation early on, so they can plan their exit or succession with clarity of the financial potential involved. 

Openly planning for the exit

In trying to achieve this value, it helps to actively improve the attractiveness of the business.  This is achieved by creating a plan that seeks to plug any potential weaknesses which a potential buyer may find.

The best businesses conduct this planning several years before the desired exit.  Having established an understanding of key considerations such as company reputation, revenue and profit, internal operating processes, staff etc, they create an exit/succession preparation plan.  This focuses on what needs to be done, not just to protect the business but more importantly to take it forward.

One group explained that when this happens, the exit plan itself becomes far more obvious and the internal succession planning becomes something everyone can jointly work towards. It isn’t uncommon for businesses to derive a huge amount of motivation from this process. This is because everyone can see how they feed into the plans and how these will achieve both the objectives, and the new company operating model.

Ensuring a smooth transition for customers/clients

Another point raised by the groups was the importance of having a strong management structure in place underneath. This is to ensure the exit/succession transition runs smoothly and customers/clients are reassured and comfortable with the process.  One group mentioned the Small Business Charter training launched last year by the Chancellor and part-funded by the Government. This is delivered by leading business schools and Universities in collaboration with industry to help companies:

•             Enhance their ability to lead and grow their businesses

•             Produce a growth plan to achieve their business’s potential

The course covers a lot of business basics and is ideal for investing in future management. Find out more here.

Ensuring a smooth cultural transition

Some sales and mergers fail because of the cultural challenges.  In particular, the two entities are not able to adopt an effective integration going forward.  Care is therefore needed to ensure the internal communications and integration activities are planned in detail as part of the sale/merger.

Minimise the impact of the unexpected

One final tip from the groups’ anecdotes was to ensure you have death in service and other insurances in place for key employees.  Exit and succession often throws up unexpected circumstances.  The more you can safeguard against the unexpected, the more resilient the business will be.


Finding the best route for exiting a business is no mean feat for owners.  Aside from the financial and legal considerations, there are also the emotional factors which come with letting go of something you’ve built over the years.  Having access to specialist advice and guidance helps to minimise the stress involved, so too is being ‘psychologically ready’.

If you are considering the succession and exit strategy for a business, please do reach out to our team of specialists shown on this page.

And if you would like to join our future Business Club events, please contact the Shipleys’ Godalming team for more information.

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