Business Owners Reconsidering Succession Plans Due To Covid 19
Data from a Platform 1 survey of business owners in June 2021 shows COVID-19 is continuing to cause private business owners in New Zealand to reconsider their succession plans.
37% of respondents said their exit strategy needs to be reconsidered compared to 41% from the same survey conducted in May 2020, after the first lockdown.
The number of business owners who said their succession plans would be delayed has decreased from 25% to 17% in 2021.
Coupled with this, over 60% of the business owners surveyed did not have a succession plan in place, which is an increase on the 48% from the 2020 survey.
“While owners may state their preferred succession option, many have no plan or a very loose plan and haven’t considered all the options available to them. The earlier they start thinking about it the more options that are available” said Platform 1 Director, Mike Warmington.
The most common preferred succession solution was an outright sale which was consistent at 30% across both surveys, although there was an increase in a gradual sale to a talented leader. Other options for succession such as family, existing staff, or a merger were some of the options noted in the survey. 26% didn’t state any preferred succession solution against 25% in 2020.
There was still a strong response to bringing on board a capable person with capital as a Business Partner, with 41% saying it would be a consideration compared to 48% in 2020.
Platform 1 Director Mike Warmington said that ”A talented external person with capital coming into a business, growing it, and gradually buying the owner out is increasingly seen as an option. Nobody has a crystal ball and a delaying approach from business owners may not be the best course of action, with talented people with capital ready now.”
One respondent in the anonymous survey commented:
“I think it has made me as a business owner realise that things can change quickly and that there is a need to find an exit strategy that allows me to move out gradually while ensuring the business is able to continue to grow and do well for my employees”
Platform 1 Covid-19 2021 Business Succession Plan Survey results
”Covid 19 is still a disruption to business owners in 2021. 23% of business owners think that it may be more difficult to find a buyer within the next year. This is however more positive than in 2020 after the first lockdown” said Mr Warmington.
About Platform 1
Platform 1 are the market leaders in Business Owner Transition and works with private business owners requiring succession. They specialise in finding people with capability and capital who gradually transition into a business, buying the owner out over time. This can be a partial or full buyout.