Last Friday I had the pleasure of presenting our investment approach as part of a panel discussion on the subject of succession planning for private business owners in the construction industry. The panel also included Marc Doucet of Doucet Mcbride LLb and Jim McConnery, CA of Welch LLP. According to the Canadian Federation of Independant Business (CFIB) 34% of entrepreneurs will retire in the next 5 years, and in the next 10 years, 66% intend to leave. It is somewhat surprising then that only 50% of entrepreneurs have a written succession plan in place.
Retirement for the owner means one of three things: sell, transfer to a family member, or retain ownership and relinquish all management duties. The benefits of a written succession plan include: protecting the financial stability and value of the business; lowering taxes on the transaction; improving the stability for employees; and finally, continuing a vision for the future. In addition, a well thought out structure reduces liability to the family.
We had a good discussion about the value of goodwill built up by the owner through a lifetime of hard work. For most in the room the view was goodwill should have some economic value at the time of sale. From the point of view of a buyer, goodwill is rarely considered in the offering price. This often results in the sale of assets, not shares.
Once the cash is out of the business, a reasonable and effective investment approach based on a expectation of success is critical.
We have developed a great tool that will help answer the questions;
Will I run out of money?
When can I afford to retire?
Can I maintain my current lifestyle while retired and will it be sustainable?
How much saving should I have at retirement?
For your free copy of our retirement planning tool send me a reply below.
