Succession Planning: Thinking in Summers, Not Financial Years

There seems to be a little trend underway, whereby business owners of a certain age, and often triggered by a particularly good holiday, return, framing their life trajectory in summers left rather than in financial years. It’s one reason why September is typically our busiest month for succession and exit mandates.

Even a reasonably straightforward trade sale can hit roadblocks without the proper preparations, faltering on avoidable issues such as messy cap tables, unclear ownership structures or incomplete records.

We advise on business sales day in, day out and know exactly what issues are likely to arise and how to prepare for them. We commonly undertake the difficult but essential conversations with dissatisfied shareholders early on, to get an understanding of their position, and align them towards achieving the best sales result. Addressing issues proactively leads to smoother, more efficient processes and helps reduce the need for additional legal interventions and associated fees.

Buyers understandably seek stability, resilience and growth potential. Heavy concentration on just one or two customers is often perceived as a risk. That’s why we stress test your sales models and assumptions to ensure you’re fully prepared, posing questions such as:-

• How secure are customer contracts and projections?

• What would happen if a key account was lost or if orders were down by 10%, 25% or 50%? And model how likely this is to happen.

• What external forces could impact trading assumptions and projections such as AI rollout, geopolitics, supply chain disruption or cost increases, tariffs? We don’t just look internally for the answers, we model these factors onto your customers because if they fail, so do you.

• How prepared are you to face such scenarios or disruptions?

• What is the sales trajectory over the next 3–5 years?

• What are the risks posed by an economic downturn or the upsides of growth?

• Is your growth and trading tracking that of the wider sector? How do forecasts compare?

• Are there new markets worth addressing, what would be the costs to do so?

• What upsides could a buyer realise through automation or consolidation?

• It might seem obvious but firstly make sure you have them!! If you don’t have a Shareholder Agreement, we strongly recommend you put one in place, ideally when shareholders are on good terms. It’s considerably easier and cheaper to get one signed up under those circumstances. Think of it as a business “prenup”!!

• Messy cap tables are commonplace. Funding rounds, dilutions, sweat shares, and informal side agreements not notarised can lead to inaccurate or incomplete cap tables, and disputes over shareholdings.

• Review your cap table, shareholder agreements and side agreements before buyers do

• Understand drag-along and tag-along rights so you know where consensus will come from

We regularly undertake challenging conversations with shareholders who might no longer be involved in the business, however, feel disadvantaged by dilutions or by the strategic the direction of the business. It’s part of our service and the process because unhappy shareholders, in the absence of drag along rights in the shareholder agreement, can derail a sale. Therefore, smoothing out disputes or agreeing sales terms with them in advance, avoids more difficult conversations later when they’re arguably in a stronger negotiating position.

Selling a business is complex enough without avoidable potential pitfalls. By stress testing sales projections, reviewing shareholder agreements, confirming employment settlements, and ensuring your business is structured for a smooth exit, you’ll be in a much stronger position to negotiate better terms and to proceed.

We advise on every element of sales transactions, from introducing suitable buyers, to guiding sensitive and complex disclosures, to managing offshoot negotiations. We cover it all to help get the deal done.

If you’re a business owner and have started counting life in summers, it’s time to chat!!