Many organisation leaders underestimate the importance of both strategies in building and/or retaining the confidence and trust of the organisation’s various stakeholders, including investors and employees. In times of transition, maintaining the confidence and trust of stakeholders is a key factor in reducing the organisation’s vulnerability.
Vulnerability in either of these circumstances could create challenging trading conditions, potentially resulting in the risk of a reduced share or exit price.
Reducing this risk can be effectively managed by developing and regularly reviewing the succession/exit strategies and making timely adjustments as required. Just as annual budgets and forecasts are reviewed regularly, succession and/or exit planning reviews could be subjected to a similar process to reduce potential future risk.
“In times of transition, maintaining the confidence and trust of stakeholders is a key factor in reducing the organisation’s vulnerability.”
In family-owned businesses, effective succession planning can minimize the potential risk of business, tax and estate-related issues. Similarly, an effective exit strategy can potentially increase the number of buyers/investors, allow the timely development of a successor/s, optimize the sale price and allow the timing of the exit.