Whether you operate your healthcare business as a sole trader, partnership, LLP or company there will always come a point where you need to consider your exit strategy.
The need for succession planning might arise due to circumstances forced upon you, such as ill-health, or economic circumstances, such as pandemics or recessions, or regulatory changes, where you do not have the resources to address the requirements. It might be that you wish to retire and reap the benefits of your hard work.
As with anything, it is always wise to plan ahead. This is particularly so if you do not want to be worrying about such things and trying to decide what to do if you should need to focus your attention on your, or a loved one’s, health.
If you are planning on selling or transferring your interest in your business, then careful planning will:
- Ensure you mould your business into the ideal shape for your chosen exit option – maximising the value you get from it
- Ensure your family and your business are secure if anything should happen to you in the intervening time
- Enable you to groom successors if they are coming from within the business - whether a family member or part of your management team
- Ensure you are prepared - and, so far as is possible, exit at the time of your choosing, when conditions are advantageous
The process may take several years but will provide you with the best opportunity to pass on your business and see it continue.
If you operate in a partnership, you will want to identify and assist upcoming partners to be prepared for the responsibilities and duties that accompany partnership and ensure there are such candidates to acquire your interest.
If you operate through a company, there are various scenarios to consider and plan for. You will need to ensure you have a Shareholders’ Agreement or bespoke articles of association addressing what happens if you wish to retire, wish to arrange a third-party sale or if you should die.
Such discussion will give you the opportunity to consider all the things that will get you where you want to be when the time comes. Properly considering this with your business partners and/or advisers will help you prepare.
Preparation might include:
- considering life and critical illness insurances
- incentive schemes for employees (to create a future generation committed to the business that might buy out your interest), or,
- getting the business in the best possible shape ready for a third party sale (ensuring you have a strong management team. This means you can retire, rather than work for the new owner to ensure continuity of the business).
There are many routes to exit relevant to different types of business and identifying those most suited to your plans will assist you to focus on relevant issues.
Our Health and Social Care Team regularly advises GP partnerships, dental practices, veterinary practices and care home owners on preparing their exit strategies, including assisting with the actual sales or retirements.
Planning ahead?
Contact our Commercial team to find out how we can help and add value to your succession planning.
