Covid-19 disrupts business owners’ succession plans
According to data from a new survey Covid-19 has brought major disruption to Kiwi business owners’ succession plans. Data released from a survey of 161 business owners show Covid-19 is […]
According to data from a new survey Covid-19 has brought major disruption to Kiwi business owners’ succession plans.
Data released from a survey of 161 business owners show Covid-19 is causing significant damage to private business owners’ succession plans in New Zealand. The key results from a report conducted by Platform 1 show that many business owners are now rethinking their options or planning to delay their business exit.
More than half these business owners were planning to exit their business over the next five years and among the over 60 year olds, this rose to 76 percent. Only 48 percent of all business owners had a firm succession plan in place prior to Covid-19.
The survey also showed that 27 percent of business owners over 60 yrs old were now rethinking their preferred business succession option and a further 31 percent were looking to delay their plans.
“Business owners realise that the economic ramifications of the virus may reduce the perceived value of their businesses today. Planning to delay could be because they are not aware of all alternative options or believe they need to build the value up themselves prior to selling,” said Platform 1’s director Mike Warmington (pictured).
“This is a major disruption to Baby Boomer business owners who have been through the GFC and now this crisis and were looking ahead to stepping back from their businesses. Forty-one percent of business owners agreed that it may be more difficult to find a buyer within the next year.”
While the survey showed 31 percent of business owners who had a plan were looking at an outright sale prior to the lockdown, other options such as family, existing staff, merger and a gradual sale to an external person were also some of the options noted in the survey. Twenty-five percent of respondents had no firm plans on what option they would take.
There was a positive response to bringing on board a capable person with capital as a business partner, with 48 percent saying it would be a consideration.
Warmington says that “A talented person introducing some capital and working in the business could help it pivot if required and navigate through the challenging times ahead. This could be an option to build value and transition ownership gradually.”
Platform 1 Covid-19 Business Succession Plan Survey results:
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