Business Transition

4 Steps for a Smooth Business Transition

Use this list ahead of a leadership change

4 Steps for a Smooth Business Transition
 

One of the best ways to maximize the long-term value of your company is to design a strategy for the day you leave, at least a year in advance, but preferably even earlier. To do that, entrepreneurs need a transition plan: a living document that identifies business and personal goals, sets milestones, is regularly revisited and is clearly communicated to appropriate stakeholders.

As you develop a transition plan for your business, here are four critical steps to take:

1. Assemble a unified team

Treat the transition process like it’s the launch of a business unit: First, assemble your team, including industry experts such as a CPA, attorney, financial advisor, marketing expert and insurance agent. Then schedule periodic meetings to consult with this team so it can address how to handle critical business functions and concerns leading up to your exit.

2. Organize your financial documents

When transitioning your business to new leadership, thorough documentation is a must. Be prepared to offer up a minimum of five years of financial documents, audited financials for at least three years and personal financial information. You’ll also want vendor and customer lists and contracts, procedural documents, legal documents and an overview of your intellectual property rights and assets.

3. Develop a forecast for prospective buyers

To a new owner, your forecast is the investment—especially when it outlines potential changes across your services, products and customer base. Developing data-driven projections for the growth and development of the business can help the new owner or prospective buyer understand the value of the company, and helps guide immediate operations so the staff has a clear path to success.

4. Update IT systems

Faulty infrastructure is easy to get used to and impossible to get around when seeking a new owner. Preparing for a successful transition means replacing custom or obsolete systems in favor of industry-standard hardware and software. Savvy prospective owners want an IT platform on which they can effortlessly expand the company.

Your banker can help you create a transition team and compile your financial records in advance, so share your plans early to ensure you’re doing everything in your power to keep the business running smoothly, even after your exit.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Related

Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at www.suntrust.com/investmentinfo.

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.