Succession planning: Why the time to act is now

Why the time to act is now

When is the right time to think about how you will sell or divest your business? The simple answer is: right now. Regardless of the size of your business, having a clear, flexible succession strategy in place is essential if you want to achieve a smooth transition while also protecting the value of what you've built – even if that strategy won’t be executed for many years to come.

Succession planning means identifying how your business will transition ownership, to whom, and by what means. A robust plan is particularly important for small and medium-sized enterprises (SMEs), which often rely heavily on founder-led relationships and leadership. Any incoming party - whether internal or external - needs to know that the inherent value of the business will survive beyond its current leaders.

There are a number of succession options available to owners today, including trade sales, Private Equity &/or Vendor-led Management Buyouts (MBOs) and Employee Ownership Trusts (EOTs). Each has its advantages depending on your priorities, company culture and composition, and desired legacy.

Trade sales

Where a business is sold to another existing company - are the most familiar succession path for many business owners. A trade sale can offer immediate liquidity to the seller but may also result in significant cultural or strategic shifts in the company they divest. Restructuring or job losses are also common if the acquiring company consolidates. While a trade sale can be lucrative, it may not align with owner’s values or their vision for the business’s future.

Management Buyouts (MBOs)

MBOs are an attractive option, particularly when there is a capable and motivated leadership team in place, who may also be supported by Private Equity investors. MBOs allow existing managers to take control of the business, providing reassurance to clients, suppliers, and staff through continuity in leadership. This option is often more streamlined than an external sale, but it does require careful planning, due diligence, and most importantly, the right funding in place.

Employee Ownership Trusts (EOTs)

EOTs are an increasingly compelling route, particularly for owners who prioritise business continuity, job security, and the preservation of company values. EOTs allow employees to take collective ownership, which typically leads to increased engagement, greater long-term stability, and a continued commitment to the founding ethos. Research shows that business owners value continuity and protecting their workforce when choosing a succession strategy - both key benefits of the EOT model. Despite these advantages, awareness of the EOT model remains relatively low.

Regardless of the succession path you choose, securing adequate funding is crucial. Many businesses remain underprepared. Recent research showed that although nearly two-thirds of owners expecting to divest in the next decade say they’ve started preparing, most admit their plans are only partially funded. This highlights the importance of working with a finance partner early in the process. Providers like ThinCats specialise in funding transitions such as MBOs and EOTs, helping mid-sized businesses navigate change with confidence.

Succession planning is an evolving process. As part of a broader owner-managed business strategy, it’s critical to keep informed of all the available options – and to keep those options open – while building a transition roadmap that reflects your goals, your people, and the long-term sustainability of your business.

The sooner you start, the more control you’ll maintain and the better prepared your business will be for a long and successful future.