Hi folks, thanks for stepping by. Hope you could read through our last blog and make some sense. If not, please email me in person: I may have to rethink on what I’ve been writing. (I will give my email id in this post)
Getting back on track, we have been trying to figure out what second and third generation entrepreneurs really want. We do understand that your journey, as founders of building an enterprise, is never reflected on your books. It is die hard sweat and toil. But how many of you have been able to make your successors really understand this. When I say really, it really means “really”. Yes, we are talking about the “real” value of your business.
And when we talk about succession, we talk about family businesses. PwC identifies succession as one of the most critical challenge faced by family run businesses. In case you don’t have a heavy wallet, you can read on. It stays in you and keeps bothering you. And when you are about to plan for your retirement, it gets tougher. Well, we could make some sense of your trauma. We did do some level of secondary research to understand the root cause of “succession failures”. Oh wow, that was a fancy oxymoron, wasn’t it!
Like experts would say, we’d also agree that internal restructuring, change management, and innovation will attract younger inheritors. But, is it that all about! It is about “creating and communicating” value that would hold them in the loop. Yeah, and like it or not, that needs to be in terms of real “money”. We live in dirty times where companies are founded not to sell products/services, but to sell the company itself.
I’d love to see entrepreneurs who see funding as a growth ingredient and not as a mark of success. And hence, I love you folks: you have been building your enterprises for life. Getting back, how do you get your sweat and toil on your books! Well, it might not happen on your books, but you can get it monetised by doing a voluntary valuation of your business. Owing respect to my finance and math teacher, the value of your sweat and commitment will be equal to the Value of your business (Done by modern professional valuation methodologies) minus Book value of Net Assets on your books. This is sometimes also referred as brand value or brand equity. Oh yes, you are the brand of your family business.
But be prepared and planned about the future of your company even on your retirement. This is required for (1) your successors to take over and (2) to discover the value of your business.
We can help you in fixing these. Step into our office or email us. Opt for a voluntary “valuation for succession planning”, and our team will be there. Thanks for reading.
(“Thanks” is reserved only for those who have read through the entire blog).
Hari Kumar, Associate at SAS Partners, Chennai. Mail him @ hari@saspartners.com
