Success in succession planning

by | Apr 16, 2020

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Last month, Giles Dunning, of specialist law firm Stephens Scown, shared his insight into the realities of succession planning for business owners in the IFA sector. Following that theme, we asked Louise Jeffreys, MD of specialist IFA mergers and acquisitions firm Gunner & Co. and Michelle Hoskin of Standards International, AKA Little Miss WOWW!, to pick up where Giles left off, focussing on the importance of planning ahead.

What, why and when?

Succession planning and your ultimate exit as a business owner can come in many forms. Possibly the most talked about route to exit in the press is a trade sale – by which we mean integrating your business into another, usually larger, financial planning-based firm. This a very popular route for financial planning firms to follow. This gives you the opportunity to pass on the responsibility of running the business, whilst typically giving your clients the opportunity to access additional or enhanced services, such as more extensive IHT planning, or access to discretionary fund management.

However, this is not your only option. There are two other routes that are becoming popular: releasing capital by selling to an investor (rather than a party in your industry), or passing on the ownership of the business to all or some of your staff. This could be through a management buyout, or potentially an Employee Ownership Trust (EOT). Paradigm Norton is an excellent example of a financial planning firm which, in 2019, transferred a majority of its shares to an EOT.

The transfer of 80% of shares in the company to the EOT has given all its’ staff a stake in its future.


Both of these options tend to allow your business to continue with a similar culture and approach – something that is harder to achieve with a trade sale.

Right from the very start, it is essential to identify and constantly question your ‘why’. Why are you doing this? What do you really want to achieve by doing so? Questioning your motivations and objectives can help you understand which options would be best for you, and when and how you should put a plan into place.

We often see business owners who spend more time considering the practicalities of exiting their business rather than focusing on their true objectives and how their chosen exit strategy can complement these.


Given the nature of exit planning, it is likely that you are only going to do this once. Making a success of this involves identifying all stakeholders who will be affected by your decision and reflecting on the future impact to them. This often extends to your family, your team, your clients and potentially many others.

When do you start?

The time to focus on these objectives is now. Regardless of when or even whether you plan to exit, planning ahead is a long process and needs to start years in advance. This way, the strong processes and procedures which would benefit you at the point of exit can be fully embedded so that they become common practice within your business and your team. The good news is that these elements will usually bring improved business efficiency in themselves, therefore your early attention to them is strongly recommended.

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