Finding the right successor – The importance of a good marketing plan

EXPERTISE | Flash update: Finding the right successor – The importance of a good marketing plan

Background

Faced with a lack of potential successors among family or staff, 38% of Quebec businesses will be sold to an external buyer.

In the vast majority of cases, however, the ideal candidate won’t simply come knocking on their door. To ensure the successful transfer of the business, they need a solid marketing plan.

This plan should identify what potential successors need to demonstrate and the strategies implemented for reaching out to them. At the very least, the marketing plan should answer the following questions:

Why?

· Why does the seller want to transfer their business?

What?

· What will be transferred?

· What knowledge and skills are required to sustain the business?

Who?

· What are the characteristics of the potential successor?

· Are they a strategic successor?

· Are they a successor operator?

When?

· What is the seller’s desired timeframe for completing the transfer?

How?

· How to identify the best candidates for succession.

· How to effectively use networking to get the message across (at the seller’s initiative or through a broker specializing in the sale of companies).

· How to communicate (saying just enough and not too much).

· How the transaction will be financed.

· How the “cohabitation” period between the old and new leadership will work.

Answers and tips to kick-start the process

1. When starting to put together a marketing plan, the seller should have a clear vision of their post-transfer plans and the financial means needed to achieve them.

2. Communication is critical. It is important to:

· Decide on the quantity of information to put out (What is the message?).

· Determine whom to share the information with (professionals working with the company, employees, others).

· Decide how to proactively approach targeted candidates.

· Create a script to facilitate communication.

3. Discussions and negotiations with a strategic successor will not be the same as those held with a successor operator.

4. The seller must plan how to finance the transaction. If a balance of sale is involved, they must decide on the amounts and acceptable conditions.

5. Finally, there needs to be a strategy on reaching the maximum number of potential candidates.

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