How to prepare for retirement or business succession and protect your legacy
private equity investment
Business owners never stop thinking about their business. It permeates everything they do. It dominates every decision made for themselves, their employees and their family. It is their life, livelihood and legacy.
Today’s business owners are facing a lot of uncertainty. While the economy is mostly holding steady, business owners are worried about how to keep their business solvent and avoid the worst-case scenario of shutting down. They are feeling the pressures of being responsible for a company and the livelihood of their employees, not to mention their own. For these reasons, many business owners are considering retiring or transitioning their business sooner than anticipated.
PLANNING FOR RETIREMENT OR TRANSITION
The average age of lower-middle-market business owners is 50 years old. Many of them have already begun thinking about succession planning and are expected to transition the business to a new owner in the next ten years.
In years past, it was very common for businesses to change hands from owner/founder to a family member. Succession within the family was expected and the founder’s children and other family members were likely already involved in the company in some way.
Their education was on-the-job training and when it was time for the business to change hands succession was, in most cases, an easy decision on who would take over the reins. The employees watched the next generation grow into leadership and, in many cases, provided a helping hand for them to step into their roles.
NEW ISSUES FACING TODAY’S BUSINESS OWNERS
However, a new issue is facing business owners in the 21st Century: their children and other close family members more likely chose higher education over on-the-job training in the family business. They have chosen careers in companies outside the family business – technology, law, accounting or other professions – leaving the legacy of the family business in question.
Further, depending on the size of the company and how long it has been in business, there may not be someone in the company well-suited to take over. This creates a dilemma for owners as to the best route to retirement or business transition.
OPTIONS FOR REACHING BUSINESS GOALS
For the best outcomes, business owners often work with a private equity firm to help determine the best strategy for their business growth and to meet their succession planning or retirement objectives. Strategies include:
- Providing liquidity for business owners’ estates
- Assisting with enhancement of business operations
- Partnering with and bolstering middle management either for day-to-day operations or succession planning.
The partners of Roebling Capital Partners (RCP) have experience in all of these scenarios. As current and former business owners and having been involved in countless M&A transactions over the years, we have seen just about every imaginable situation and overcome what seemed to be insurmountable obstacles.
How do you manage a crisis in which you lose over a third of operational revenues virtually overnight? How do you weather a financial downturn? How do you deal with other challenges you face daily as a business owner? These are not just concepts read in textbooks. These are real world experiences RCP partners have faced and successfully resolved.
If you are experiencing these or other challenges, you do not need to face them alone. RCP can help you overcome each of these scenarios and more.
YOU DO NOT NEED TO GO IT ALONE
At Roebling Capital Partners, our passion is working side-by-side with business owners, to structure private equity transactions that meet their long-term goals.
With a down-to-earth common-sense approach, the result of years of structuring private equity transactions, we provide guidance to business owners and carefully support them throughout the process and beyond to ensure success and protect owners from potential risks of business transitioning.
Whether you are just exploring options for your business or you are ready to become a portfolio company of RCP, we are happy to work through potential scenarios with you.*
Preparing for a successful business transition
Determining the fate of a business can seem an overwhelming decision for business owners. Who is best to take over – someone internal or external to the company? Is it better to sell the company completely? Or, if an owner is not confident the business will be managed well after their departure, is it best to just close up shop altogether?
These are tough decisions for today’s business owners. They need a team they can count on who have real-world knowledge of the issues they are facing to provide the guidance needed for a smooth and successful exit.
Visit the RCP Investment Criteria to see if your business is a potential fit, then give us a call to learn more.
Roebling Capital Partners make controlling equity investments in lower-middle-market companies who wish to expand grow or sell their businesses.
ABOUT THE AUTHOR
About the author: Dan Magarian is Co-founder and Partner at Roebling Capital Partners, a lower-middle-market private equity investment firm.
CONTACT: Dmagarian@RCPprivateequity.com or 513-507-8400
