Examples

Why is TRANSITION OF OWNERSHIP so hard?

Thinking about exiting your business can be challenging. Questions like, ‘Will I have enough for retirement?’ ‘Will my legacy be in safe hands?’  ‘How can I be fair to all my children?’ keep many business owners up at night.  Answering these questions is a lower priority than immediate challenges in day to day business, so they often go unanswered. Unlike with a farming operation, which is asset intensive, there are a lot of intangibles when transition an agri-business.

Transitioning a business can be a very time consuming and frustrating process, and good advice difficult to find. This process is challenging, as it takes so much time and energy that could instead be invested into your business or other areas of your life.

Sheepdog Succession specializes in succession planning. We have a depth of knowledge and experience that considers all aspects of a successful transition, while working with experts in areas such as tax and business valuations to drive towards the best outcomes. We provide a range of services, from assessment and planning, through to business transformation and managing the sales process.
Sheepdog Strategies specializes in business ownership transitions. We have a depth of knowledge and experience that considers all aspects of a successful transition, while working with experts in areas such as tax and business valuations to drive towards the best outcomes. We provide a range of services, from assessment and planning, through to business transformation and managing the sales process.

BUYER TYPES

What types of buyers are there?

You probably have some options in mind for who you’re going to sell your business to and how the transition should go. But there may be other options that better suit the exit you want. One that should be considered is keeping your business by putting a management team in place so that it runs independently of the owner.

FAMILY MEMBER

Single relative or group of relatives

Advantages

  • Likely already trained on managing the business
  • Continues legacy in the family

Challenges

  • Other family members may see the deal as unfair to them
  • Family members may not have the right skillsets to operate and grow the business
  • If multiple people, risk of tensions in future

COMPETITOR

Direct competitor or a company looking to enter your sector

Advantages

  • Likely no training needed

Challenges

  • Likely to discontinue your brand and legacy
  • Only value customers and/or suppliers, therefore willing to pay less

MANAGEMENT BUYOUT

A single employee or group of employees

Advantages

  • Likely already trained on managing the business

Challenges

  • May require additional financial support relative to other buyers
  • Employees may not have the right skillsets to operate and grow the business

PRIVATE BUYER

Individual or team looking to buy and operate a business

Advantages

  • Likely to continue to grow your legacy

Challenges

  • May require a lot of training, as won’t know your business and industry
  • May require additional financial support relative to other buyers

Private Equity*

Companies specialized in buying, improving, selling

Advantages

  • Well funded and may pay a higher price if see growth opportunities

Challenges

  • May roll your company into another, ending legacy

Maintain Ownership

Management team to operate independent of owner

Advantages

  • Better return than taking money out of business and investing elsewhere

Challenges

  • Capital remains in business, could be worth less in future
  • Still involved in business
  • Risk of relying on others to manage and grow your business
  • Additional cost of management
* Note: Private Equity firms typically only look at companies with a minimum of approximately $3 million net profit per year

WORK WITH YOU

There are many other buyer types or hybrids of these ones available. Working with an advisor to determine the type of exit you want, and matching that with a buyer type, will help achieve your goals.

If you own the real estate, you also need to consider how it will be dealt with. Do you want to sell it or keep it and lease to the new business owner? If you’re selling it, is it more valuable sold with the business or as a separate transaction?

There are a multitude of factors and options to consider.

WORK WITH YOU

There are many other buyer types or hybrids of these ones available. Working with an advisor to determine the type of exit you want, and matching that with a buyer type, will help achieve your goals.

If you own the real estate, you also need to consider how it will be dealt with. Do you want to sell it or keep it and lease to the new business owner? If you’re selling it, is it more valuable sold with the business or as a separate transaction?

There are a multitude of factors and options to consider.

Case Study: Alberta Food Manufacturer

A manufacturer of Asian style noodles was facing several business challenges. Sheepdog Strategies were retained to provide business coaching and advice.

Our approach was to facilitate discussion with the business owner around strategy, planning, production, and marketing. The result was that we added value throughout the process, helping the business owner to think about their business differently and identify where to focus efforts.

Get in touch

We look forward to hearing from you!

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(403) 471-9491