Succession planning doesn’t have to be as cut-throat and relentless as the hit TV show made it out to be, but understanding your exit options and ensuring that your chosen route will deliver exactly what you hope to achieve can be a daunting process. A feasibility study can clearly outline the pros and cons, resulting in a clear exit strategy.
Importance of Feasibility Studies in Exit Planning
A business feasibility study is a great exercise to undertake when you are ready to begin your succession planning but need clarification on what options are best for the shareholders, employees, and business in general.
A feasibility study allows you to evaluate several different exit strategy options, or your preferred routes. It will determine the potential value based on the business’s current and future financial performance, as well as considering the shareholdings.
By comparing different exit options and having the information visible within one report, it is easy to weigh up the pros and cons. These may differ significantly for some businesses than others, as well as the potential of what could be achieved for the shareholders by going down such a succession route.
This isn’t to say that a feasibility study is only an excellent exercise for the current shareholders. It also gives those wishing to acquire shares an insight into the potential value of the business at a given time, whilst outlining what it would cost them to buy in at a certain point, given that the financial information is accurate and performance stays on track.
It also allows the shareholders and senior management team (if they are involved in the process) to evaluate how different succession options may impact the team and the business.
Each exit strategy has its advantages and disadvantages, which can be seen here. Shareholders may automatically reject some routes based on their appetite for risk, or favour those which may conclude quicker.
How to Choose a Feasibility Study Consultant
Now that you have the report, what’s next? fds can deliver the report’s findings to the selected team/shareholders, outlining how the options could benefit or affect your business specifically. fds can help navigate discussions to try and achieve the best outcome for all parties, as not everybody around the table may have the same preference. This can be tricky to manage in-house. Sometimes, having a friendly professional to sound ideas and worries off can make the most significant difference.
Seek a consultant with experience in conducting feasibility studies and an excellent understanding of the available exit options. Consultants with a proven track record of experience will reassure you that these professionals can understand the specific challenges and opportunities relevant to you and your business.
Interested in beginning your succession planning and have a couple of options you would like to explore? Get in touch today or learn more on our Feasibility Study page.