With 62% of New Zealand business owners over 50, 45% wanting to sell and only 11% having a plan, there is a huge need for being ready with an effective succession plan.*

When owners are selling, there are a number of ways to do this but they tend fall into two key areas: voluntary - for retirement, raising capital, mergers, acquisitions etc, and involuntary - at times of sickness, death or dispute.

Many business owners today regard their company as a retirement fund.

This means that if you don't get it right, you don't have the level of security in retirement that you would hope for. Without effective planning you won't realise the real value of the business.

On the other hand, if succession is planned for in plenty of time, the benefits can be immense. It will allow you to achieve a greater capital sum for retirement or enable investment in other ventures.

Any valuation of a business typically falls into one of three methodologies: the earnings approach, the market transfer approach and the net asset approach. Each method has its benefits so it is a good idea to discuss your plans with your WHK adviser.

So how do you maximise the value of your business?

Every business owner knows why their business is special and where that 'magic' is. They know what makes them stand out from other companies. They also know where they are vulnerable and what keeps them up at night. Owners need to work on the magic and remove the vulnerability.

Highlighted below are five key areas to get right when looking to maximise the value of a business:

1. A Good Management Team
2. Management Reporting Systems
3. Profit and Cash flow
4. Good People
5. Register IP

Nothing sells a business better than good growth prospects and good product development. PLAN FOR THE SALE - and make sure you discuss your plans with your adviser.

For further information on how to maximise the value of your business, visit our website 

*Source: ANZ Privately Owned Business barometer.