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No matter how successful your forestry business, no matter how invested you are in it, at some point you will inevitably look to transition out of it. Whether you’re planning to sell your business to a third party or an employee, or you’re looking to pass the torch to the next generation, a comprehensive exit strategy is critical for both the survival of your business and peace-of-mind as you head into retirement. A good exit strategy should help maximize your organization’s value, minimize taxes and allow you to accomplish both financial and personal goals.
In building your strategy, reviewing these five key areas can help you prioritize what needs extra attention before prepping your forestry business for sale or transition.
Everyone knows your people are your most important asset. A strong and loyal management team is critical to the successful transition of your business, particularly if you’re looking to sell to an outside party. Involving key team members early in the process, preparing them for their potential future role and ensuring they’re adequately compensated are essential steps to building loyalty within your team.
Forestry businesses are often guilty of relying too heavily on the knowledge and experience of owners. Taking the time to document your policies and procedures can smooth the transition process and increase your attractiveness to potential buyers.
The forestry industry, like many others, can often be built on handshakes and relationships. It’s important to ensure your customer base will still be around after you’ve left the organization. Wherever possible, ensuring your clients are diversified will help your business survive any succession scenario.
Accurate financial records, up-to-date tax filings and precise budgets and variances are all key value indicators for future buyers. In order to sell your business, the purchaser will generally have to obtain financing. Those funds can be nearly impossible to obtain without a clear picture of your business value and financial health. Keeping your finances in good order and building a strong relationship with your bank can greatly benefit you once it comes time to sell.
Proper tax planning is critical when it comes time to transition out of your business. The wrong corporate structure can cost you hundreds of thousands of dollars and significantly impact your retirement fund. Setting retirement goals at the outset of your succession planning process can help you identify whether a change is required for the way your organization is structured.
Addressing these five areas now can only help your business. You’ll likely find new efficiencies for your organization in the short term while creating an attractive property for sale in the long term. Remember, just because your business is ready to sell, doesn’t mean you have to start courting buyers. It simply means when the right opportunity presents itself, you’ll be ready to seize it.
Related Topics:Retirement; Selling a Business; ExitSMART™
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