The takeover of a company comprises many obstacles and risks. A business plan can help identify and deal with the most frequent traps at an early stage.
Taking over a company is not straightforward. Correctly valuing the balances taken over and agreeing with customers and suppliers on the terms of future collaboration undoubtedly represent the biggest challenge. It is also necessary to determine exactly whether essential infrastructure elements are obsolete and that there are no large investments to be made imminently. Additionally, it is necessary to agree with the former owner on a sale price and guarantees which do not prejudice the company’s future chances, whilst taking into account the risks entailed.
A business plan for company succession
A business plan is not just an essential tool for new start-ups. It also lends itself to the purchase of an existing company. With the help of a business plan, the successor develops its personal vision of the company it is taking over.
When drawing up a business plan for succession, future components are decisive. First, the future buyer draws up a realistic report on the current state of the company. Second, it defines its plans for the company and the measures to be taken to realize those plans. It can thus demonstrate to all interested parties that it is capable of making forecasts and planning for the future. An emergency plan designating the person handling company management, if required, also forms part of the business plan.
A detailed business plan answers the following questions, among others:
- What are the new objectives or the amended objectives for the company?
- Does the company need to be managed in the future in the same way as the predecessor or are there specific areas to be changed or restructured?
- Does the image of the company after the takeover need to be maintained or transformed, gradually or radically?
- Does the range of products need to be maintained, reduced or expanded quickly?
- Does the market need to be worked the same way or does this need to be done with new people and new instruments?
- Do current staffs need to be kept or cut? Do new employees have to be hired or do some employees need changing?
- What investments need to be made and how?
- Do the site and premises need to be changed or reoriented?
- Will the company continue working with the same business partners or does it need to develop new collaborations?
- Is the existing legal structure suitable or does it need to be changed?
- Does the financing of the company allow realization of investment projects and projected turnover or does the equity or financing by borrowing external capital need to be increased?