The Ultimate Business Succession Guide
For SME Owners in Australia, New Zealand,
Canada and the United Kingdom

Every founder exits eventually. Blue Harbour Capital guides SME owners
and their teams through succession.

From strategy to structure to post-deal success.
We focus on legacy, continuity and a confident next chapter.

Part 1: Preparing for Succession — Vision, Value and Letting Go

The Business of Business Succession

Most SME founders do not start their businesses thinking about how they’ll finish. But whether your business is 5 years old or 35, the reality is the same: at some point, you will step away — voluntarily or otherwise.

Succession is inevitable. Doing it well is optional.

This part of the guide is about preparing your business — and yourself — for a successful transition. Not just financially, but emotionally, strategically and operationally. Because succession is not simply a legal transaction. It is a transformation in leadership, ownership and responsibility. It is the bridge between your legacy and the future of your business.

You will learn:

What succession planning really means — and what success looks like
The emotional dynamics many founders face when preparing to exit
How to assess your business’s readiness for succession
How to increase the value and resilience of your company over time

Whether you are planning to pass your business to family, sell to your employees, or simply create more options for the future, this section lays the foundation for everything that follows.

Chapter 1: The Fundamentals of Business Succession

What Is Business Succession?

Business succession is the process of transferring leadership, ownership or both from the current owner to the next generation — whether that’s family, employees, managers or an external buyer.

It’s not just about exit. It’s about continuity.
It’s about preserving what you’ve built — and giving it the best chance to succeed without you.

Succession planning is often confused with selling the business. But selling is just one of several outcomes. In many cases, founders don’t want a full exit. They want options: the ability to step back gradually, reward loyal employees, protect jobs and secure their legacy.

A well-executed succession plan provides just that.

The Most Common Succession Pathways

Succession looks different for every business, but most routes fall into five broad categories:

1. Family Succession

Passing the business to children or relatives. This model is traditional, but becoming less common as generational interest and capability gaps grow.

2. Management Buyout (MBO)

Selling the business to your internal leadership team. This option works well when there is a capable and committed team in place.

3. Employee-Led Buyout (ELBO)

Transitioning ownership to employees more broadly — not just top executives — using a structured financing approach. This preserves culture and rewards loyalty.

4. Employee Ownership Trusts (EOTs) or ESOPs

Transferring the business into a trust or plan for the benefit of all employees. These models are gaining popularity, particularly in the UK, Canada and Australia.

5. Third-Party Sale or Strategic Acquisition

Selling the business to an external buyer such as a competitor, private equity firm or strategic investor. This route may offer the highest financial return, but less control over what happens next.

Each path comes with trade-offs in terms of value, control, legacy and complexity. Choosing the right one requires understanding not just the financials — but your values, your team and your vision for the future.

What Does Success Look Like?

For most founders, a “successful” succession includes more than just a sale price. It includes:

Continuity — the business thrives after your departure
Legacy — your values and culture live on
Certainty — the process is structured and de-risked
Reward — your life’s work is recognised financially
Empowerment — your team is set up to lead and grow

A good plan balances all of these. A great plan turns them into a reality.

Why Most Business Owners Don’t Plan for Succession

Despite its importance, fewer than 30% of SME owners have a documented succession plan. Why?

Here are the most common reasons:

“I’m too busy running the business.”
Succession feels like a future problem, not a current priority.
“It’s too complicated.”
Legal, tax, valuation and emotional factors can feel overwhelming.
“No one can replace me.”
Founders often underestimate the capabilities of their teams — or overestimate their own irreplaceability.
“I don’t know where to start.”
Without a roadmap, succession planning can feel like staring into the fog.

This guide exists to change that.

Start with the End in Mind

Succession planning isn’t about giving up. It’s about growing up — as a business, a team and a legacy. Whether your ideal future is a full retirement, a phased step-back or simply more freedom, the process begins with clarity.

Ask yourself:

What do I want my business to look like in 10 years?
Who could lead it if I stepped away tomorrow?
What legacy do I want to leave behind?
What would give me peace of mind today?

If you don’t have clear answers yet, you’re not alone. But you are in the right place.

Key Takeaways

Succession is not just about exit — it’s about continuity and legacy
There are multiple paths to succession, each with trade-offs
Planning is essential, yet often avoided due to fear or complexity
Success means clarity, control, and confidence in your next chapter
The earlier you start, the more options and leverage you have

Chapter 2: The Emotional Side of Succession

Why Letting Go is the Hardest — and Most Important — Part

Most succession planning guides focus on numbers, deals, and legal documents. And while those are critical, they’re not where most successions get stuck.

They get stuck in the founder’s head.

In our experience advising SME owners across Australia, New Zealand, Canada, and the UK, the emotional side of succession is the real battleground. It’s where delay, indecision, and dysfunction take root.

This chapter will help you understand the psychological dynamics of succession and give you tools to move forward with clarity and confidence — not just as a business owner, but as a leader stepping into a new role.

The Founder Identity Trap

Owning and leading a business is more than a job. For many founders, it is their identity.

You started it. You built it. You led it.
Your name, your values, your sacrifices are baked into every part of it.
It is not just a business — it is a reflection of who you are.

So when the time comes to step back, it doesn’t just feel like a change. It can feel like a loss of self.

This is what we call the Founder Identity Trap: the unconscious belief that “if I’m not running this business, who am I?”

Letting go of the reins can feel like losing relevance, control, or purpose — unless you’ve prepared for the next phase with as much intention as the last.

Common Emotional Roadblocks

Here are some of the most common emotional blockers we see in SME succession:

1. Fear of Losing Control

Founders often worry that things will go off-track without them. Even if they trust their team, they fear decline, failure, or losing influence.

2. Perfection Paralysis

“If it’s not the right time, right successor, or right deal, I’ll wait.” Waiting can feel safer than risking an imperfect outcome — but it leads to stagnation.

3. Guilt or Loyalty Conflicts

Some owners feel guilt about stepping away, particularly if the team has been with them for years. Others feel torn between children, employees, or stakeholders with competing interests.

4. Fear of Obsolescence

“What will I do after I leave?” Retirement or reinvention can feel aimless if there’s no clear next chapter.

Why Avoiding Succession Feels Safer (But Isn’t)

Avoidance gives the illusion of control. But in reality, it reduces your options.

The later you leave succession planning, the fewer choices you have — and the higher the risk of:

Forced sale under stress (illness, burnout, market shifts)
Leadership vacuum if something happens to you
Team disengagement due to uncertainty
Loss of enterprise value due to lack of preparation

Avoiding the emotional discomfort now leads to bigger problems later. The only way through is forward.

How to Start Letting Go — With Confidence

Letting go does not mean giving up. It means shifting your role from doer to designer, from leader to legacy builder.

Here are practical ways to begin:

1. Visualise the Future Without You in Charge

Not in a worst-case way — but in a realistic, positive scenario. What would the business look like if it thrived without you?

2. Create a Personal Vision for Life After Succession

Succession should not be a void. It should be a transition into something purposeful — mentoring, investing, family, community, or a new venture.

3. Talk Openly With Your Trusted Circle

Advisors, family, key employees — succession becomes real when you start talking about it. These conversations surface ideas, risks and opportunities.

4. Shift from Ownership to Stewardship

Start thinking of yourself not just as the owner, but as a steward of something bigger. Your role is to guide it into its next phase, not to control it forever.

You’re Not Alone

It’s normal to feel conflicted. Many founders go through this process quietly, thinking they’re the only ones wrestling with identity, fear, or uncertainty.

You are not alone — and you do not have to figure it out alone.

Getting external perspective from a coach, advisor, or peer who has navigated succession can help you see things more clearly. The goal is not to rush the process, but to begin it with intention and support.

Key Takeaways

Succession is as much an emotional journey as a financial one
Most founders struggle with letting go, control, identity, or uncertainty
Avoidance feels safe but creates long-term risk
You can begin succession with small steps, honest conversations, and a clear vision for what comes next
Letting go is not a loss — it’s a legacy move

Chapter 3: Understanding and Increasing Business Value

What Makes Your Business Valuable — and How to Make It Succession-Ready

You can’t plan a great succession without understanding the value of your business.

Not just what it’s worth on paper — but what makes it resilient, attractive and ready for someone else to own, lead and grow. Whether you plan to pass it to family, sell to your team, or transition to employees through a trust or ESOP model, value is the foundation of a successful succession.

This chapter will help you:

Understand how business value is calculated
Identify the key drivers and risk factors in your business
Spot and fix founder dependency
Take practical steps to increase value before succession

What Is Business Value?

Business value is the estimated worth of your company in a sale, transfer or ownership handover. But it’s more than just a number. It reflects how buyers, successors or investors perceive the future potential of the business — with or without you.

There are two main ways to think about business value:

1. Financial Value

This includes revenue, profit, cash flow, assets and growth potential. In most SME contexts, a business is valued using a multiple of its EBITDA (earnings before interest, taxes, depreciation and amortisation).

2. Strategic Value

This includes intangible factors like customer loyalty, brand reputation, intellectual property, recurring revenue, systems, leadership depth and employee engagement. These are often what differentiate a strong succession candidate from a fragile one.

Buyers and successors don’t just ask what is this business earning? — they ask how sustainable is it without the founder?

The Valuation Formula (Simplified)

Most SME businesses are valued using a version of this formula:

EBITDA x Multiple = Enterprise Value

EBITDA reflects your profitability
The multiple reflects perceived risk, growth, and future potential

Multiples usually range from 2x to 6x in SME transactions, depending on industry, size, growth and buyer confidence.

Key factors that increase the multiple:

Recurring or contract-based revenue
Diverse customer base (no key client risk)
Strong management team
Documented systems and processes
Minimal reliance on the founder
Defensible market position
Clean financials and reporting

Founder Dependency: The Hidden Risk

One of the biggest value killers in succession is founder dependency.

Ask yourself:

Would the business run smoothly for 6 months without me?
Do customers ask for me by name?
Am I the only person who can make key decisions or close deals?
Would the business stall if I took a step back?

If the answer to these is yes, you don’t have a business — you have a job with overhead.

Founder dependency suppresses value, makes buyouts harder to finance, and scares off successors. It also makes employee ownership transitions more fragile, as the organisation is too reliant on one individual.

Key Value Drivers in a Succession-Ready Business

Here are the most common traits of a high-value, succession-ready business:

1. Capable and Empowered Team

Buyers and employees want confidence that the business can run without you. A strong second-tier leadership team is critical.

2. Documented Systems and Processes

Clear SOPs, operational manuals and workflows reduce reliance on individual knowledge. This supports continuity and efficiency.

3. Recurring or Predictable Revenue

Subscription models, service contracts or long-term customer relationships reduce risk and increase confidence in future earnings.

4. Diverse Customer and Supplier Base

No single customer or supplier should represent more than 15-20% of revenue or inputs. Over-concentration is a major risk flag.

5. Clean Financials and Reporting

Accurate, timely financial reporting with clear separation between business and personal expenses signals maturity and reliability.

6. Cultural Resilience

Businesses that have a strong culture, clear values and employee engagement are more likely to succeed in transitions like MBOs, ELBOs or EOTs.

How to Increase Business Value Before Succession

Here are practical steps you can take over the next 1 to 3 years to increase value and improve succession readiness:

1. Build and Invest in Your Leadership Team

Delegate decision-making. Give your team visibility and authority. If you’re planning a management or employee-led buyout, this is non-negotiable.

2. Systematise Your Operations

Document processes. Use technology to automate and streamline. The goal is to reduce key-person risk — including your own.

3. Improve Customer and Revenue Mix

Diversify your revenue sources. Move from project-based to recurring models where possible. Retention is more valuable than acquisition.

4. Separate Personal and Business Finances

Remove unnecessary related-party transactions. Pay yourself a fair market wage. Keep your financials clean and ready for due diligence.

5. Establish Good Governance

Set up regular reporting, management meetings and strategic reviews. This prepares the business to run on rhythm — not personality.

Value Is Not Just About Exit — It’s About Optionality

The purpose of increasing business value isn’t just to get a better price. It’s to give you more options.

You can transition ownership gradually, knowing the business is stable.
You can explore employee ownership with confidence.
You can attract capital, successors or buyers without panic or pressure.
You can step away without putting your team, clients or legacy at risk.

In short, value gives you control — over your timeline, your options and your future.

Key Takeaways

Business value is driven by financial performance and strategic factors
Founder dependency is one of the biggest succession risks
Strong teams, systems and customer diversity increase both value and confidence
Clean financials and governance prepare the business for transition
Increasing value gives you more control, more options and more peace of mind

Part 2: Exploring Your Exit Options

Choosing the Right Succession Path for You, Your Team and Your Legacy

By now, you understand why succession matters — and what makes a business ready for it.

But the next big question is how you’ll transition ownership and leadership. There is no one-size-fits-all answer.

That’s what this section is for.

In Part 2, we’ll walk through the five most common succession paths:

Family Succession
Management Buyout (MBO)
Employee-Led Buyout (ELBO)
Employee Ownership Trusts (EOTs), ESOPs and Hybrid Models
Third-Party Sales or Strategic Acquisitions

Each of these has different implications for:

Value — how and when you get paid
Control — how much you retain during and after transition
Continuity — what happens to your team, clients and culture
Complexity — what’s involved in making it work
Legacy — how your vision and values are carried forward

In this section, we’ll help you explore each path on its own merits — not based on assumptions or pressure, but based on your goals, values and business context.

You may already have a preferred option. Or you may be considering several. Either way, this part of the guide will give you the clarity and confidence to choose the right direction — and avoid costly missteps.

Chapter 4: Family Succession

Keeping It in the Family — Without Tearing the Family Apart

For generations, passing the business to your children or relatives was the default succession plan.

Today, it is just one of many options — and increasingly, one of the most complex. Fewer next-generation family members want to take over. And even when they do, the process is rarely straightforward.

This chapter is for business owners considering a family succession — either now or in the future. We’ll explore how to approach it with realism, structure and fairness, so that both the business and the family remain intact.

Does Family Succession Still Make Sense?

In some cases, yes. In others, not at all.

Family succession can work beautifully when:

The next generation genuinely wants to lead the business
They are capable or can grow into the role
The transition is planned, supported and governed well
The founder is ready to let go and guide, not control

But many family transitions struggle because of:

Assumptions about entitlement
Lack of capability or interest
Sibling rivalry or fairness issues
Founder reluctance to step aside
No clear plan or governance in place

The lesson: family succession is not a birthright — it’s a business decision.

The 3 Layers of Family Succession

A successful family succession plan must address three overlapping dimensions:

1. Ownership

Who owns shares in the business? Will ownership be gifted, sold, or held in trust? What if one child works in the business and others don’t?

2. Leadership

Who is going to run the business? Are they ready? Do they want the responsibility? Leadership must be earned, not inherited.

3. Family Dynamics

Even well-structured plans can fail if family relationships are unhealthy. Emotion, expectation and legacy all come into play.

A robust succession plan separates these dimensions while managing their interactions.

Common Pitfalls in Family Transitions

Here are the most common mistakes business owners make when transitioning to family:

1. Assuming Instead of Asking

Founders often assume their children want to take over — or that they are capable of doing so. This leads to resentment on both sides.

2. Waiting Too Long

Delaying the transition until a health scare or burnout limits your ability to mentor and guide. It also increases conflict risk.

3. Confusing Fairness with Equality

Giving all children equal ownership may seem fair, but only one may be working in the business. This creates friction and undermines performance.

4. Lack of Structure or Governance

No plan, no board, no clear roles — just emotion and hope. This is where most family transitions fall apart.

Designing a Successful Family Succession

1. Have the Hard Conversations Early

Talk openly with your children or relatives about their aspirations, fears and expectations. Do not assume alignment — create it.

2. Separate Ownership from Leadership

It is possible for one child to own, another to lead, and others to hold passive shares. Define roles clearly and document them.

3. Use Independent Assessment and Coaching

Bring in an external advisor to assess successor readiness and create a development plan. Objectivity avoids blind spots and emotional bias.

4. Create a Succession Timeline

Lay out a phased transition plan over 1 to 5 years. Include shadowing, mentoring, formal decision-making milestones and contingency plans.

5. Document Everything

Use legal agreements, shareholder agreements, governance policies and even a family constitution. Structure avoids assumptions and future disputes.

6. Establish Governance Structures

This might include:

A family council or advisory board
Regular shareholder meetings with clear agendas
An independent chair or external board member to facilitate oversight

Dealing with Fairness and Legacy

Many founders struggle with the question: “How do I treat my children fairly?”

There is no one-size-fits-all answer. But here are principles that help:

Equal is not always fair. If only one child works in the business, equal ownership may not reflect contribution or responsibility.
Communicate clearly. Unspoken expectations are the root of most conflict.
Use alternative assets. Sometimes, the business goes to one child, and others receive property, investments or other assets.
Be transparent about your intentions. Surprises after you’re gone rarely go well.

Ultimately, your goal is to preserve both family harmony and business performance. That requires clarity, honesty and structure.

When It Doesn’t Work

Not every business is suited to family succession. If your children:

Don’t want the responsibility
Aren’t ready or capable
Live overseas or have different ambitions
Prefer to receive wealth, not a job

…then forcing a handover may do more harm than good.

In those cases, consider a management buyout, employee ownership transition, or third-party sale — and leave a different kind of legacy.

Key Takeaways

Family succession is possible, but not automatic
Success requires separating ownership, leadership and family dynamics
Governance, coaching and clear communication are essential
Fair does not always mean equal — and clarity avoids conflict
If the next generation is not ready or willing, explore other succession paths

Chapter 5: Management Buyouts and Employee-Led Buyouts

Succession Through the People Who Know Your Business Best

Many founders look across the office and think, “They could run this place.”

Your management team or loyal employees often know your business better than anyone. They understand the operations, culture and customers. And they’ve been instrumental in building the business alongside you.

So what if they became the next owners?

Management Buyouts (MBOs) and Employee-Led Buyouts (ELBOs) are two of the most powerful — and often overlooked — succession paths available to SME founders today. They preserve continuity, reward loyalty, and keep your legacy intact.

In this chapter, we’ll cover:

The difference between MBOs and ELBOs
When an employee-led transition makes sense
How to structure the deal — even if employees can’t fund it themselves
The benefits and challenges of internal succession
How to set your team up for success as owners

What Is a Management Buyout (MBO)?

A Management Buyout is when a business is purchased by its existing leadership team — usually a small group of key managers who take on ownership as a group.

In many cases, the founder sells all or part of the business to these internal leaders over time, with external funding (like bank finance or vendor loans) supporting the transaction.

MBOs are ideal when:

There is a strong, trusted leadership team already in place
The team has the appetite and capacity to lead
The founder wants continuity rather than outside disruption
The business has stable cash flow to support debt or staged payments

What Is an Employee-Led Buyout (ELBO)?

An ELBO is broader and more inclusive than a typical MBO. Rather than a small group of managers, the ownership is extended to employees at multiple levels, not just the executive team.

This model aligns closely with values like loyalty, stewardship, culture and continuity. It can be structured through:

Direct share ownership
An employee trust (similar to an EOT or ESOP)
Hybrid models combining equity, trust and aligned external capital

ELBOs are ideal when:

The founder wants to reward long-serving employees
Culture and values are a key part of the legacy
The team is motivated to take ownership but lacks personal capital
There’s a desire to avoid third-party sales or private equity exits

MBO vs ELBO: What’s the Difference?

"But My Team Doesn’t Have the Money..."

This is the number one objection founders raise — and the easiest to overcome.

In both MBOs and ELBOs, it is rare for employees or managers to fund the purchase personally upfront. Instead, the deal is structured using:

Vendor finance — the founder receives payments over time
Bank or private debt — repaid using business cash flow
External aligned capital — investors who support employee transitions
Hybrid ownership models — where ownership is phased or held in trust

These structures make it possible for loyal, capable teams to become owners without needing personal wealth or upfront capital.

Why This Model Is Growing

Globally, more founders are choosing internal transitions over third-party exits. Here’s why:

1. Continuity and Culture

Your team already understands your values, your customers and your rhythm. Transferring ownership internally minimises disruption.

2. Legacy Preservation

MBOs and ELBOs keep your vision alive. The business remains rooted in its founding mission — even as it grows beyond you.

3. Motivated Successors

People who’ve helped build the business often bring passion, commitment and insight. Ownership takes that to the next level.

4. Flexibility and Control

You can structure a gradual exit, stay on as a mentor, and avoid pressure from external buyers or short-term investors.

5. Team Retention and Morale

When employees see a path to ownership, they’re more engaged. They’re also less likely to jump ship during the transition.

How to Structure a Successful Internal Buyout

1. Assess Team Readiness

Do you have a capable leadership team or rising stars with potential? Are they aligned on values, vision and appetite for ownership?

2. Start with a Conversation

Many founders are surprised by how much appetite their team has — once the door is opened. Start informal, then bring in advisors to shape the conversation.

3. Engage Advisors Early

You’ll need support from legal, tax, finance and succession experts who understand MBOs and employee ownership models. These are not standard deals.

4. Design a Transition Timeline

Most MBOs and ELBOs happen over 1 to 5 years. A phased approach gives the team time to grow into their roles and de-risks the handover.

5. Provide Coaching and Support

Ownership is not the same as leadership. New owners need mentorship, accountability and a clear plan — especially in the first 12 to 24 months post-deal.

Case Snapshot: A Founder’s Legacy Through an ELBO

A third-generation manufacturing business in the UK chose to transition ownership to its employees using a trust structure and external financing. The founder received full value, the leadership team stayed in place, and employees now share in profits and decision-making. Retention is up. Culture is thriving. And the founder still chairs the board, guiding strategy while enjoying a phased retirement.

This is the power of an ELBO done right — legacy, continuity and shared success.

Is an MBO or ELBO Right for You?

These models are worth exploring if:

You care about what happens after the exit
You have a capable and loyal team
You value culture, people and stewardship
You are open to a flexible structure, not just a payday
You want to leave the business in good hands — not just sell to the highest bidder

Key Takeaways

MBOs and ELBOs are powerful succession options built around continuity
Your team does not need personal capital to buy the business — structure makes it possible
These models preserve culture, reward loyalty and protect your legacy
With the right planning, internal transitions can be smoother and more values-aligned than third-party sales
Coaching and support are essential post-deal to ensure success

Chapter 6: Employee Ownership — EOTs, ESOPs and Hybrid Models

Structuring Succession Around Shared Ownership and Long-Term Stewardship

What if your employees didn’t just work in the business — they owned it?

Employee ownership is one of the most powerful tools for succession. It aligns values, rewards loyalty, and ensures that the business remains rooted in the culture that made it successful in the first place.

More than just a feel-good concept, Employee Ownership Trusts (EOTs) and Employee Share Ownership Plans (ESOPs) are now being used across Australia, New Zealand, Canada and the UK as structured, tax-efficient ways to transition ownership to employees.

In this chapter, you’ll learn:

The difference between EOTs, ESOPs and direct share schemes
How these models are used in succession planning
The financial and cultural benefits of employee ownership
How to combine employee ownership with external capital in hybrid models
Legal, tax and governance considerations by region

What Is Employee Ownership?

Employee ownership means your team has a real stake in the business — not just through bonuses or incentives, but through actual equity or beneficial ownership.

There are three broad models:

1. Employee Ownership Trusts (EOTs)

A trust is set up to hold shares on behalf of all employees, usually funded by the company or a vendor-financed buyout.

Common in the UK, now emerging in AU and CA
Employees are beneficiaries, not direct shareholders
Promotes long-term stability and stewardship
Often comes with tax reliefs for the exiting owner

2. Employee Share Ownership Plans (ESOPs)

Employees own shares directly or through a trust that allocates shares to individuals over time.

Common in Canada, US and parts of Australia
Can be funded by the company or through loans
Offers more individual ownership but can be complex to administer

3. Direct Share Schemes

Employees purchase or are granted shares directly — often used for key team members or management in smaller businesses.

Common in Australia and New Zealand
Simpler for small groups, but harder to scale
Can be part of a broader ELBO or MBO structure

Why Employee Ownership Works in Succession

When you’re planning succession, employee ownership offers unique advantages:

1. Continuity of Culture and Values

The people who helped build the business keep it running — with the same ethos and standards.

2. Stronger Employee Engagement and Retention

Employees who own a share of the business think and act like owners. Productivity, retention and morale often improve post-transition.

3. Tax Efficiency (In Some Jurisdictions)

In the UK, for example, EOTs allow founders to sell the business tax-free if certain conditions are met. Other regions are introducing similar incentives.

4. Flexible Deal Structures

Ownership can be transferred gradually over time, using a mix of profits, vendor finance and outside capital.

5. Positive Legacy and Reputation

Businesses that transition to employee ownership often attract talent, customers and media attention — reinforcing brand trust and values.

Common Misconceptions

“Employees don’t want the risk.”

In reality, employees don’t want uncertainty. Structured ownership gives them security and upside — not risk without control.

“It’s too complex.”

With the right legal and advisory support, employee ownership can be simpler and more stable than a sale to an external party.

“My team can’t afford it.”

Like ELBOs and MBOs, employee ownership is not about employee savings. It’s about using the business’s value and future cash flow to finance the transition.

Hybrid Models: Ownership + External Capital

Many founders want to reward employees and realise value through a structured exit.

In these cases, hybrid models can work well. These combine:

Employee ownership structures (EOT, ESOP, share schemes)
External aligned capital (impact funds, values-based investors, bank finance)
Vendor finance (where the founder is paid over time)

This approach gives you liquidity while maintaining control, values and alignment — a win-win for founders, teams and investors.

How the Transition Typically Works

1. Valuation

The business is valued independently to set a fair purchase price.

2. Trust or Plan Setup

An EOT or ESOP is established, with legal and tax structures depending on the country.

3. Financing Structure

Payment to the founder is structured using a mix of profits, vendor finance and third-party funding.

4. Governance Framework

Boards or trustees are appointed to oversee the business, often with employee representatives.

5. Communication and Engagement

Employees are introduced to the model, educated on ownership, and engaged in decision-making over time.

Regional Considerations

United Kingdom

EOTs are well-established and supported by government tax relief
Founder can sell 100% tax-free if requirements are met
Requires at least 51% of the business to be held by the trust
Increasingly popular with SMEs across all sectors

Australia and New Zealand

Direct share schemes are more common, but trust-based models are emerging
Legislative frameworks are evolving to encourage wider adoption
Employee ownership is growing in awareness and cultural appeal

Canada

ESOPs are growing, with strong uptake in mid-sized firms
Government supports ESOPs as a succession tool
Recent discussions around introducing a Canadian version of the EOT

Is Employee Ownership Right for You?

Consider this path if:

You value legacy, culture and long-term stewardship
You want to reward and retain loyal employees
You want flexibility in how and when you exit
You prefer continuity over a clean break
You want your business to stand for something beyond the bottom line

Employee ownership is not just a deal structure. It’s a philosophy — one that turns succession into shared success.

Key Takeaways

Employee ownership can be structured through EOTs, ESOPs or direct shares
These models offer continuity, engagement and tax advantages in some regions
Hybrid models allow you to blend employee ownership with external capital
Governance, communication and coaching are critical to long-term success
Employee ownership is growing across the UK, Canada, Australia and New Zealand — and is reshaping what succession can mean for founders

Chapter 7: Third-Party Sales and Strategic Acquisitions

How to Sell Your Business Without Selling Out Your Legacy

For many founders, the most obvious path to succession is a third-party sale — transferring the business to an outside buyer, such as a competitor, investor, private equity firm, or strategic acquirer.

Done well, this option can deliver strong financial outcomes and open new growth opportunities for the business. But it also comes with risk — especially if you care about culture, continuity and people.

This chapter will help you:

Understand what third-party buyers are looking for
Prepare your business for sale and maximise value
Navigate deal types, timelines and key decision points
Protect your team, culture and legacy in the process
Decide whether this path aligns with your goals

What Is a Third-Party Sale?

A third-party sale involves selling your business to someone outside your current ownership circle. This could be:

A strategic buyer (such as a competitor or supplier)
A financial buyer (such as a private equity firm or investment group)
A corporate acquirer (looking for market entry or synergy)
An individual buyer (such as a high-net-worth entrepreneur)

Each type of buyer comes with different motives, timelines and expectations. Some want control and quick returns. Others want growth and long-term involvement. The key is knowing what you want — and finding a buyer who aligns.

When a Third-Party Sale Makes Sense

This route may be a good fit if:

You want to fully exit and cash out
There is no natural successor internally
The business is scalable and attractive to external investors
The market is consolidating and buyers are active
You’re comfortable handing over control quickly

It may not be the right fit if:

You want to protect your culture and team at all costs
You prefer a gradual transition or partial exit
You’re uncomfortable with external influence post-sale

How Buyers Think About Your Business

Third-party buyers — especially institutional ones — look at businesses through a risk-return lens. They want:

Strong recurring revenue
Scalable systems and margins
Low customer concentration risk
Clear growth opportunities
Minimal founder dependency
Clean financials and governance

Put simply: they are buying the future cash flow of the business. The more de-risked and scalable it looks, the more they are willing to pay — and the smoother the transaction.

Types of Deals

Here are common deal structures in third-party sales:

1. Full Sale (100% Equity Sale)

You exit completely
Clean and simple, but you lose control
Often involves a handover period (3–12 months)

2. Partial Sale / Staged Exit

You sell a majority now, retain a minority stake
Often used by PE firms or strategic acquirers
Allows you to benefit from future growth and de-risk gradually

3. Earn-Out

Part of your sale price is conditional on future business performance
Aligns your incentives but can cause tension if expectations aren’t met
Requires careful definition and legal protections

4. Asset Sale

Buyer acquires the business’s assets rather than shares
Common in smaller transactions or distressed sales
May have tax implications for both sides

How to Prepare Your Business for Sale

Buyers don’t just look at the last 12 months — they look at trends, structures and signals of stability. To prepare:

1. Get a Business Valuation

Engage an independent advisor to assess fair market value. Understand your EBITDA, multiples in your industry, and what drives premiums.

2. Clean Up Financials

Ensure accurate, audited (or review-level) financials. Remove personal expenses. Clarify working capital needs.

3. De-Risk the Business

Reduce reliance on you. Strengthen systems, leadership, customer diversity and contracts.

4. Document Everything

Have up-to-date agreements, leases, HR policies and IP protection in place. Due diligence will test your paperwork.

5. Engage Advisors Early

You’ll need tax, legal and M&A experts to navigate the sale process. This is not a DIY project.

Balancing Price with Purpose

Many founders make the mistake of focusing only on valuation — and then regretting the outcome when the business changes hands.

To avoid that:

Clarify your deal-breakers upfront. For example: layoffs, offshoring, rebranding, culture change.
Ask buyers about their post-acquisition plan. Will they grow the business? Integrate it? Flip it?
Negotiate beyond the sale price. Include protections for staff, brand, and your own role during transition.

Selling is not just a financial transaction — it is a transfer of responsibility. Make sure you’re handing it to someone you trust.

What to Expect in the Process

Here’s a simplified sale timeline:

Pre-sale planning (3–6 months)
Valuation, business clean-up, advisor engagement
Go to market (2–4 months)
Finding and vetting potential buyers
Due diligence (1–3 months)
Buyers inspect every part of the business
Negotiation and contracts (1–2 months)
Finalising price, terms, handover agreements
Completion and transition (0–12 months)
Post-deal support, staff engagement, founder involvement

The entire process can take 6 to 18 months, depending on complexity.

Case Snapshot: A Strategic Sale with Founder Oversight

A tech-enabled services firm in Canada sold 80% of the business to a strategic buyer in the US. The founder retained a 20% stake, stayed on as board chair, and negotiated a no-layoffs clause and cultural continuity plan. The buyer brought capital and systems, while the founder ensured the legacy lived on — a strategic sale without a sellout.

Is This Path Right for You?

Ask yourself:

Am I ready to hand over full control?
Do I want a clean exit or a gradual one?
Will my team and culture thrive under new ownership?
What does a successful transition look like to me — beyond just price?

If the answers point to a strategic buyer, financial investor or external owner, then a third-party sale may be your best path forward — as long as you manage it on your terms.

Key Takeaways

Third-party sales can provide strong financial outcomes but require preparation and trade-offs
Buyers are looking for scalable, de-risked, and professionally run businesses
Deal structures vary — from full exits to staged transitions and earn-outs
Legacy protection, team continuity and cultural fit should be part of your deal strategy
The sale process is complex — engage advisors early and plan for 6–18 months

Part 3: Designing the Transition

From Planning to Paperwork — Structuring a Deal That Works for Everyone

Once you’ve chosen your preferred succession path — whether that’s family, management, employees or an external buyer — the next step is to turn your vision into a concrete plan.

That’s what Part 3 is all about.

This section focuses on the practical mechanics of succession:

Structuring the deal
Funding the transaction
Defining roles and responsibilities
Building the timeline and roadmap
Putting governance in place to support success

Many transitions fall apart not because of a bad idea — but because of poor structure, misaligned expectations or avoidable confusion. This is especially true in internal successions like MBOs, ELBOs or employee ownership plans, where trust, clarity and communication are everything.

In Part 3, you’ll learn how to:

Design a succession roadmap that fits your goals and timeline
Structure the ownership transfer in a tax- and cash-flow-efficient way
Finance the buyout without overburdening the business or your team
Build in guardrails — like shareholder agreements, governance, and decision-making frameworks — to ensure success post-deal

Whether you’re stepping out fully or staying on in an advisory capacity, this section will help you build a plan that is sustainable, fair and future-proof.

Chapter 8: Building Your Succession Roadmap

From Vision to Action — Mapping the Transition from Owner to Legacy Builder

Succession doesn’t happen in a single moment. It happens over time — through preparation, planning, and deliberate handover.

That’s why every successful transition starts with a roadmap.

Whether you want to exit completely in 12 months or gradually step back over 5 years, a clear roadmap helps you:

Align your goals
Avoid confusion and costly missteps
Engage the right people at the right time
Build momentum instead of waiting for a “perfect moment”

In this chapter, you’ll learn how to:

Define your personal and business goals
Build a high-level succession timeline
Identify key milestones and decisions
Assemble your advisory team
Communicate with the right stakeholders at the right time

Why You Need a Succession Roadmap

Without a roadmap, succession planning feels vague and overwhelming. Many founders stall because they don’t know what comes next — or who to involve.

A roadmap gives you:

Clarity — what’s happening, when, and why
Control — proactive planning instead of reactive pressure
Confidence — a structured path to follow
Continuity — alignment across your team, family and advisors

Whether your timeline is 12 months or 5 years, the roadmap provides structure. You don’t have to make every decision now — but you do need to start.

Start with Your Goals

Every succession plan should begin with one simple question:

“What does success look like — for me, and for the business?”

Here are a few dimensions to consider:

1. Financial Goals

How much do you need to extract from the business?
Do you want a lump sum, staged payments, or retained equity?
Are you willing to use vendor finance, earn-outs or reinvestment?

2. Personal Goals

Do you want to retire completely, stay on in a reduced role, or take a sabbatical?
Do you want to mentor the next generation or move on fully?
What does your next chapter look like?

3. Legacy Goals

What kind of culture, leadership and values do you want to leave behind?
Who do you want the business to serve in the future — family, employees, community?
How important is continuity vs. a clean break?

4. Risk Tolerance

How comfortable are you with complexity, shared control, or delayed payments?
What kind of trade-offs are you willing to make?

Once you’re clear on these goals, you can begin designing a plan that serves them — not just the highest bidder or easiest path.

Build a Succession Timeline

Every roadmap needs a timeline — even if it’s flexible. Here’s a simple framework to follow, using a 3-year plan as an example:

Year 1: Exploration and Preparation

Clarify goals
Assess business value and founder dependency
Explore succession options (family, MBO, ELBO, EOT, sale)
Begin informal conversations with internal successors
Engage external advisors
Begin cleaning up finances, processes, and governance

Year 2: Structuring and Alignment

Choose a succession path and structure
Design the deal framework and ownership model
Begin capability development for successors
Draft legal documents and begin financing discussions
Set internal communication plan in motion

Year 3: Execution and Transition

Finalise deal structure and documentation
Execute the transaction or trust transfer
Begin phased leadership handover
Launch 100-day post-deal plan
Support new owners with coaching, governance, and systems
Shift your role to chair, advisor or exit

Note: This timeline can compress to 12 months or stretch to 5+ years, depending on your goals, business maturity and succession path.

Who Should Be Involved — and When?

A successful succession plan involves multiple parties — but not all at once. Here’s a rough guide:

Early Stage (Exploration)

Founder(s)
Strategic advisor or succession coach
Spouse or family (if applicable)

Middle Stage (Structuring)

Legal counsel (succession, employment, governance)
Accountant / tax advisor
Valuation expert or business broker
Internal leadership team (confidential discussions)

Final Stage (Execution)

Lenders or external funders (if relevant)
Employee representatives or trustees (in EOT/ELBO models)
External board members or independent chairs
Communications advisor (for internal and external messaging)

Choosing the right advisors early can save you time, money and stress later — especially when it comes to tax, deal structure, and post-deal governance.

Common Roadmap Mistakes to Avoid

Waiting until you’re “ready”
Succession readiness builds over time — don’t wait for the perfect moment to start.
Not aligning personal and business goals
Your financial, personal and legacy goals need to be integrated, not treated separately.
Involving successors too late
Whether family, employees or managers, give them time to grow into ownership.
No contingency planning
Always have a Plan B — illness, deal breakdowns, or team changes happen.
Poor communication
Silence creates uncertainty. Communicate clearly with key stakeholders at every phase.

Your Succession Planning Checklist

Here’s a quick checklist to guide your roadmap creation:

Define your personal, financial and legacy goals
Get a realistic business valuation
Identify and evaluate your succession options
Build a phased 1–3 year transition timeline
Engage experienced advisors across legal, tax, finance and coaching
Clean up financials, processes and governance
Begin capability development for successors
Draft key documents: succession plan, deal terms, shareholder agreements
Communicate clearly with team, clients and family
Design a post-deal coaching and governance framework

Key Takeaways

Every successful succession needs a clear roadmap, not just a transaction
Start with your goals — financial, personal and legacy
Design a realistic timeline based on readiness, not pressure
Involve the right advisors and successors at the right time
Avoid common mistakes like poor communication or last-minute planning

Chapter 9: Structuring the Deal

How to Transfer Ownership Without Breaking the Business (or the Relationship)

Once you’ve chosen a succession path and mapped your transition timeline, the next step is to structure the deal itself.

This is where succession becomes real.

Whether you’re passing ownership to family, employees, management, or an external buyer, the structure of your deal will determine:

How and when value is transferred
How risk is shared between parties
What role you’ll play after the transaction
How the business is financed and governed going forward

Done well, a structured deal balances your exit goals with the long-term stability of the business. Done poorly, it creates confusion, resentment or financial strain.

This chapter will help you understand:

Common deal structures and legal frameworks
How to use tools like vendor finance and earn-outs
Key tax and legal considerations in Australia, New Zealand, Canada and the UK
How to protect both parties while keeping the deal flexible
What to expect during documentation and negotiation

What Are You Actually Transferring?

In a succession deal, there are two main types of transfers:

1. Ownership (Equity or Shares)

You’re selling or gifting shares in the company, either all at once or in stages.

2. Control (Leadership or Governance)

You’re handing over decision-making power — via board seats, CEO handover, or delegated authority.

These two can be transferred together or separately. For example, you might transfer 60% of the shares now but remain Chair of the Board for 12 months. Or you might step back operationally but retain equity for long-term returns.

The key is to define what is changing, when, and how.

Common Deal Structures

Here are the most widely used structures in SME successions:

1. Outright Sale

100% ownership is transferred in a single transaction
The founder exits fully, often after a short handover
Common in third-party or strategic acquisitions

2. Staged Exit

Ownership is transferred in tranches over time (e.g. 30% now, 70% in 3 years)
Enables a smoother transition and phased leadership handover
Often used in family successions, MBOs and ELBOs

3. Vendor Finance

The buyer (family, team, employees) pays over time from business profits
Reduces the need for external capital
Risk is shared between the seller and buyer
Common in internal successions and employee buyouts

4. Earn-Outs

Part of the sale price is paid only if performance targets are met post-transition
Aligns incentives, especially in third-party sales
Needs careful structuring to avoid future conflict

5. Hybrid Structures

Combines multiple elements — for example, an initial sale with vendor finance, plus employee ownership via a trust
Increasingly common in ELBOs and purpose-driven transitions

Legal Frameworks to Support the Deal

Structuring a deal is not just about who gets paid and when — it’s about legal clarity. You’ll typically need the following documents:

Sale and Purchase Agreement (SPA) — the formal contract governing the transaction
Shareholders’ Agreement — defines how ownership is managed post-deal, including voting rights, restrictions and dispute resolution
Governance Framework — outlines board composition, decision rights and oversight
Employment or Consulting Agreements — especially if you’re staying on during the transition
Vendor Finance Agreement — if payments are made over time
Trust Deeds or ESOP Plans — if using employee ownership structures

These should be tailored to your country’s laws — and your specific succession plan.

Tax Considerations (By Region)

United Kingdom

EOTs offer 0% Capital Gains Tax if structured correctly
Third-party sales typically taxed at 10–20%
Entrepreneurs’ Relief (now Business Asset Disposal Relief) may apply

Australia

Capital Gains Tax (CGT) applies, but concessions may reduce liability for SMEs
Employee Share Schemes (ESS) must meet specific ATO requirements
Asset vs. share sale has major tax implications

New Zealand

No formal CGT, but some sales may trigger tax on revenue account property
Structuring via shares vs. assets impacts GST and tax obligations
Fewer formal employee ownership rules, but evolving fast

Canada

Lifetime Capital Gains Exemption (LCGE) applies to qualifying business shares
ESOPs and employee trusts gaining momentum
BDC and other lenders support structured internal buyouts

Tip: Engage your tax advisor early. Many succession deals are undone — or delayed — due to avoidable tax surprises.

Balancing Risk and Reward

Here’s how to think about risk allocation in deal structures:

The goal is to align interests — not to win the negotiation. A good deal works for both sides and protects the long-term success of the business.

Practical Steps to Structure Your Deal

Define what you are selling
Shares? Control? Assets? Minority or majority? Now or over time?
Get a business valuation
Engage a qualified valuer to set a market-aligned price. This creates trust and clarity.
Determine how the buyer will fund it
Will they use vendor finance? Bank debt? External capital? Business cash flow?
Work with legal and tax advisors
Don’t DIY this. Proper structuring saves time, tax and risk down the line.
Build in flexibility and protection
Include dispute resolution, buyback rights, and exit clauses to handle future uncertainty.
Don’t forget governance
The deal isn’t just about ownership. It’s about how decisions will be made after the transition.

Case Snapshot: Structuring a Staged ELBO in Australia

A values-driven founder of a professional services firm transitioned 60% of ownership to employees through a hybrid trust model. The deal included vendor finance over five years, a clear shareholder agreement, and a new board structure with employee representatives. The founder remained Chair for two years before exiting. The business retained its culture, grew profitably — and the founder got a well-paced, de-risked exit.

Key Takeaways

Structuring the deal is where succession becomes real — financially, legally and operationally
Use the right mix of tools: staged exits, vendor finance, earn-outs or hybrid models
Legal documents like SPAs, shareholder agreements and governance frameworks are essential
Tax rules vary significantly by country — engage expert advisors early
A well-structured deal balances risk, protects both sides, and sets the business up to thrive

Chapter 10: Financing an Employee or Management Buyout

How Your Team Can Buy the Business — Without Personal Wealth or Risky Loans

One of the biggest myths in succession planning is this:

“My employees or managers can’t afford to buy the business.”

The truth is: they probably can’t — if you’re expecting them to write personal cheques.

But modern buyout models don’t require that.

With the right structure, internal buyouts can be financed through a combination of business cash flow, vendor support, external capital and employee trusts — allowing your team to become owners without personal debt and without compromising business stability.

In this chapter, we’ll break down:

How employee and management buyouts are typically funded
The role of vendor finance, external lenders and aligned investors
Why personal wealth is not a barrier to ownership
How to structure repayments to protect business health
Where to find funding support in your region

What Makes Internal Buyouts Work Financially

Internal transitions — such as Management Buyouts (MBOs) and Employee-Led Buyouts (ELBOs) — work because of one key principle:

The business finances the transition. Not the individuals.

This means:

The business generates cash flow
That cash flow is used (partially or entirely) to pay the founder
Ownership is transferred to the team via shares, trusts or hybrid models

This preserves continuity, keeps incentives aligned, and avoids loading the business or the team with unsustainable risk.

5 Common Funding Sources for Internal Buyouts

Here are the core mechanisms used to finance employee or management succession plans:

1. Vendor Finance (Founder-Financed Sale)

How it works:

You agree to sell the business at a fair value
The buyer (your team) pays in instalments over time
Payments are funded from business profits

Why it works:

No upfront cash required from the team
Business continues operating without external interference
You retain security and can structure terms to your preference

Risk:

You get paid over time, so success depends on business performance
You may need to stay involved longer to support stability

2. Bank Debt / Asset-Based Lending

How it works:

A bank lends money to the business or a special purpose vehicle (SPV)
The loan is repaid through business cash flow
The team uses the funds to buy your shares

Why it works:

Enables immediate partial or full payout
Preserves ownership structure and internal control
Often secured against business assets or cash flow

Risk:

Adds debt to the business — requires strong financials
Lenders may impose covenants or controls

Tip: BDC in Canada and specialist lenders in the UK, AU and NZ offer succession-specific financing.

3. External Capital (Aligned Investors or Funds)

How it works:

A values-aligned investor (such as a stewardship fund, family office or impact fund) provides capital
The investor takes a minority or temporary stake
The team transitions into full ownership over time

Why it works:

Enables immediate liquidity for you
Brings in strategic capital or support
Keeps ownership moving toward employees, not outsiders

Risk:

Involves shared control — needs clear shareholder agreements
Must find an investor aligned with purpose, not just profit

4. Profit Recycling via Trusts (EOT/ESOP Models)

How it works:

An employee trust (e.g., EOT in the UK) is established
The business makes payments to the trust over time
The trust uses this cash to pay you and hold ownership for employees

Why it works:

No personal risk for employees
Tax-efficient in many regions
Promotes long-term stewardship, not short-term returns

Risk:

More complex to set up
Requires good governance and trustee oversight

5. Hybrid Models (Combining the Above)

How it works:

Mix and match vendor finance, bank lending, external investment and trusts
Tailored to your goals, team and cash flow profile

Why it works:

Flexible, balanced, and adaptive
Enables phased transitions and shared risk
Keeps legacy and control aligned with your values

Key Principles for Financing Internal Buyouts

Whether you use vendor finance, debt, a trust or external investors, the following principles should guide your deal:

1. Affordability First

Structure repayments based on actual business performance — not optimistic forecasts. Build in buffers.

2. Clarity in Agreements

Formalise everything: price, timeline, repayment terms, fallback clauses. Use lawyers who understand succession and SME transactions.

3. Governance Is Essential

When ownership is shared or financed over time, governance ensures alignment. Boards, shareholder agreements and advisory support help avoid conflict.

4. Don’t Over-Leverage the Business

Too much debt can suffocate operations. Keep repayment terms sustainable and preserve working capital for growth.

5. Invest in Coaching and Capability

New owners need support — financially, emotionally and operationally. Build post-deal coaching and development into your transition plan.

Regional Funding Highlights

United Kingdom

HMRC supports Employee Ownership Trusts with tax relief
Some banks and impact funds support ELBOs and stewardship models
Emerging hybrid models blending private capital with employee ownership

Canada

Business Development Bank of Canada (BDC) supports MBOs and ESOPs
Lifetime Capital Gains Exemption (LCGE) can apply
Growing ESOP ecosystem and financial planning support

Australia

Employee Share Schemes are tax-advantaged if structured properly
Banks and private lenders may support MBOs with stable cash flow
ESOPs are more common than trusts, but both models are growing

New Zealand

Banks may fund management-led buyouts
No formal ESOP/EOT framework yet, but simple structures can work
External aligned investors increasingly support purpose-led transitions

Case Snapshot: A Vendor-Financed MBO in New Zealand

A founder of a regional logistics business transitioned ownership to three senior managers using a vendor finance agreement over five years. The deal included coaching, a new governance framework and gradual role transition. The business grew under new leadership, the founder was paid in full, and staff retention remained above 90%.

Key Takeaways

Your team does not need personal wealth to buy the business
Structured financing makes internal transitions feasible and sustainable
Use a mix of tools: vendor finance, bank lending, external capital, trusts
Keep repayments affordable and aligned with business performance
Strong governance and coaching post-deal are critical to long-term success

Chapter 11: 100-Day Post-Transaction Planning

What Happens After the Deal Matters More Than the Deal Itself

You’ve done it. The deal is signed, the ownership has changed hands, and the hard part is over.

Right?

Not quite.

The truth is, most succession failures happen after the transaction — not during. A lack of clarity, leadership drift, staff confusion, or cultural instability in the first few months post-transaction can undo years of work.

That’s why the 100 days after succession are just as important as the years of planning that came before. This is your window to:

Align leadership
Communicate with staff and clients
Set the tone and culture going forward
Establish confidence in the new owners
Build momentum and continuity

In this chapter, we’ll help you create a practical post-deal plan to make the transition successful — not just on paper, but in practice.

Why the First 100 Days Matter

The first 100 days after ownership transfer are a critical period of adjustment. Without a clear plan, even good transitions can unravel due to:

Mixed messaging to employees or clients
Leadership confusion and unclear roles
Culture clashes or morale drops
Operational bottlenecks or inaction
Overwhelmed new owners without support

A simple, focused 100-day plan creates structure and certainty — helping new owners lead with confidence and keeping the business stable as change unfolds.

What a 100-Day Post-Transaction Plan Should Cover

A 100-day plan doesn’t have to be complicated. But it does need to be intentional. Here are the key components:

1. Leadership Alignment

Make sure the new owners or leadership team are aligned on:

Roles and responsibilities
Decision-making authority
Strategic priorities
Communication cadence
Governance and reporting structure

Tip: Use weekly owner meetings and monthly board updates to keep alignment tight.

2. Internal Communication

The team wants to know three things:

What’s changed?
What’s staying the same?
What does it mean for me?

Your messaging should be clear, calm and consistent. Ideally, it should come from both the founder and the new leadership team — a unified voice helps build trust.

Suggested actions:

Host an all-staff briefing or town hall
Send a personal message from the founder (or Chair)
Reaffirm values, mission and continuity
Be transparent about what’s next — even if you don’t have all the answers

3. Customer and Supplier Communication

Reassure external stakeholders early. They want to know that service, relationships and quality will continue uninterrupted.

Suggested actions:

Send a tailored announcement to top customers and suppliers
Schedule face-to-face or virtual check-ins with key accounts
Update your website and marketing materials
Keep messaging focused on continuity, stability and future plans

4. Operational Continuity

Review and confirm:

Cash flow, payables and receivables
Supplier contracts and renewals
Key systems and reporting processes
HR, payroll and compliance obligations

Nothing erodes confidence faster than a missed payroll or operational misstep. Use this period to double down on reliability.

5. Quick Wins and Culture Boosts

The goal isn’t to overhaul the business — it’s to build early momentum. Identify small, symbolic wins that show the team the new owners are capable, values-aligned and listening.

Examples:

Reintroduce a team benefit that was paused
Launch a listening tour or anonymous staff survey
Celebrate staff anniversaries or customer wins
Host a team lunch or event as a “new chapter” kickoff

6. Coaching and Support for New Owners

Ownership is a mindset shift. Even confident managers may feel overwhelmed or isolated in the first 100 days.

Provide structured coaching to support the transition, such as:

Weekly check-ins with an external advisor or coach
Peer learning sessions with other owner-managers
Access to templates, dashboards and decision-making tools
Leadership development resources tailored to the new role

This is where Blue Harbour Capital’s post-deal coaching program adds critical value — helping leaders step into ownership, not just management.

7. Governance and Rhythm

Establish a strong cadence of meetings and reporting:

Weekly tactical meetings for the leadership team
Monthly strategic reviews (with board or advisor support)
Quarterly all-hands updates
Regular financial and KPI tracking

Succession is not a “set and forget” event — it requires active leadership and disciplined execution.

A Sample 100-Day Timeline

Here’s what a typical 100-day transition might look like:

Founder Involvement: Stay or Step Back?

Depending on your deal structure and preferences, your involvement in the first 100 days might include:

Serving as Chair or advisor to the new owners
Providing informal mentoring or transition support
Staying operationally involved in a defined role
Or stepping back entirely and letting the new team lead

Whatever your level of involvement, clarity is key. Agree on your role and boundaries upfront — and honour them.

Key Takeaways

The first 100 days post-succession are critical to long-term success
Use this time to align leadership, reassure staff and stabilise operations
A clear communication plan reduces anxiety and builds trust
Coaching and governance support help new owners lead effectively
Small wins early on build momentum and confidence
Founders should define — and stick to — their post-deal role

Chapter 12: Coaching the Next Generation of Owners

From Managers to Owner-Leaders — Building Capability, Confidence and Culture After Succession

The ink is dry. The ownership has transferred. The public announcement is made.

But here’s the truth most succession advisors won’t tell you:

The real work starts now.

Ownership is not just a legal status. It’s a mindset, a skillset, and a long-term responsibility. And for most newly transitioned owner-managers — especially in management buyouts, employee-led buyouts, or EOTs — this is unfamiliar territory.

Without coaching, support and structured development, even the most capable managers can struggle to succeed as owners. They need time, tools, and trusted guidance to:

Think strategically
Make tough calls
Lead culturally, not just operationally
Create accountability and rhythm
Grow into the role of steward, not just executor

In this chapter, we’ll explore:

The difference between management and ownership
Why leadership coaching is critical post-succession
How to build leadership habits, cadence and confidence
What role founders or external advisors can play
How to create a coaching framework that sticks

Management vs. Ownership: What Changes?

Most internal successors — whether a CEO, management team, or broad employee group — are already good at running the business day-to-day. But ownership requires a shift in thinking:

Without support, the transition can be overwhelming — especially if the founder was a strong, centralised decision-maker.

Why Post-Deal Coaching Matters

Here’s what we’ve learned through experience at Blue Harbour Capital:

Capability doesn’t automatically equal confidence
Even highly skilled managers can second-guess themselves in the owner’s seat.

Teams need space to re-align power dynamics
New owner-leaders often struggle with boundaries, team loyalty, or conflict avoidance.

Rhythm matters
Succession only succeeds if the business runs on decision-making cadence, not personality.

People need a sounding board
Without a founder to lean on, new owners need someone who can challenge, support and guide.

Post-deal coaching fills that gap.

What to Focus on in Owner Coaching

1. Strategic Thinking and Priority Setting

New owners must step out of firefighting mode and into forward planning. Coaching should help them ask:

What are the next 3–5 strategic goals?
What will we say no to?
How will we define success?

2. Financial Acumen and Capital Stewardship

Many new owners have never had to think like capital allocators. Coaching can include:

Understanding cash flow, debt covenants and capital structure
Setting financial KPIs and scenario plans
Making trade-offs between short-term cost and long-term value

3. Leadership Presence and Decision-Making

Moving from “trusted manager” to “accountable leader” is a leap. Coaching should build:

Confidence in decision-making
Communication skills with teams and stakeholders
The ability to set tone and culture

4. Governance and Accountability

Owner-leaders must build discipline and systems that replace the founder’s instincts. Coaching helps with:

Board and advisor relationships
Meeting cadence and agenda setting
Personal accountability frameworks

Who Provides the Coaching?

Options include:

Founder (in a defined Chair or mentor role)
Can offer unique insight and continuity — if they maintain boundaries and avoid micromanagement.
External Business Coach
Brings objectivity, structure and confidentiality. Ideal for management teams or broad employee groups.
Advisory Board Member or Chair
Provides strategic challenge and governance oversight. Works best when paired with one-on-one coaching.
Peer Learning Groups
Facilitates shared experience and perspective. Helps normalise challenges and expand thinking.

At Blue Harbour Capital, we often provide coaching alongside advisory and succession execution — ensuring continuity from planning to performance.

How to Structure a Coaching Framework

1. Start with a Capability Map

Assess your new owners across key areas:

Financial
Strategic
Cultural
Communication
Operational
Governance

2. Set Coaching Objectives

These should align with the 100-day plan, the succession roadmap and the business strategy.

3. Establish a Rhythm

Monthly or fortnightly sessions, with progress check-ins and accountability loops.

4. Use Tools and Templates

Decision-making frameworks, KPI dashboards, board prep checklists, stakeholder maps.

5. Track Progress and Feedback

What’s changing? What’s improving? What’s stuck?

Founder Involvement: Mentor, Not Manager

If you’re staying involved after succession, your role is to guide — not to override.

Think of yourself as the gardener, not the captain.

You provide the environment, sunlight and water — but it’s up to the next generation to grow. Coaching can be the bridge between letting go and setting them up to succeed.

Case Snapshot: Coaching a Leadership Team in an ELBO

After a founder-led exit to an employee trust, the leadership team of a UK engineering firm entered a structured coaching program. Over 12 months, they moved from reactive managers to confident owner-leaders — setting strategic goals, presenting at board level, and launching a new product line. Staff satisfaction rose. Turnover dropped. And the business grew 14% year-on-year — without the founder.

Key Takeaways

Ownership is a mindset — and it takes time and support to develop
Post-deal coaching helps new owners build confidence, alignment and accountability
Focus areas include strategy, finance, leadership and governance
Coaching works best when structured, consistent and integrated with business goals
Founders can support as mentors — but should avoid hovering or second-guessing
Internal transitions only succeed when the next generation is empowered, not just installed

Chapter 13: KPI Monitoring and Business Continuity

Keeping the Business on Track After You Step Back

Succession is not the finish line — it’s the starting point of a new chapter for your business.

After ownership transitions, the key challenge becomes maintaining performance and continuity while the new leadership team settles into their roles.

It’s a vulnerable period — especially if the founder was a central figure in decision-making, relationships, or financial discipline. That’s why successful transitions rely on more than coaching alone.

They require metrics, monitoring, and a rhythm of performance that keeps the business moving forward — regardless of who’s in charge.

In this chapter, we’ll explore:

Why KPI monitoring is essential after succession
The most important metrics to track in the first 12 months
How to establish reporting cadences and dashboards
How governance and advisory support ensures long-term continuity
Tools to keep the business accountable — without micromanaging

Why KPI Monitoring Matters Post-Succession

Ownership may change in a moment. Performance does not.

In the months after a succession, especially internal transitions (MBOs, ELBOs, EOTs), the business must continue to:

Meet financial targets
Retain staff and clients
Fulfil obligations to lenders or vendors
Make confident, well-informed decisions
Communicate progress clearly to stakeholders

Without consistent KPI tracking, it’s easy for new leaders to drift — not because of incompetence, but because of uncertainty, overload, or lack of feedback.

A well-structured monitoring system provides:

Clarity — Are we on track?
Accountability — Who owns what?
Visibility — What’s happening across the business?
Confidence — For owners, staff, customers and lenders

What to Track: Core Post-Succession KPIs

Every business is different — but here are the most important categories of KPIs to monitor during the first year post-transition:

1. Financial Health

Revenue and gross margin (vs forecast)
EBITDA and net profit
Cash flow and working capital
Debt servicing ratios (especially if vendor finance or bank debt is in play)

Why it matters: These metrics give a clear view of stability and performance. Missing them early on can spook funders, staff or the board.

2. Operational Performance

Project or service delivery on time and budget
Inventory turnover or utilisation rates
Cost-to-serve or efficiency ratios
System or process adherence (SOP compliance)

Why it matters: Transition can disrupt operations. These KPIs ensure execution remains sharp and customer satisfaction is protected.

3. People and Culture

Staff retention and turnover
Employee engagement or satisfaction
New hire success rate or time to productivity
Training hours or coaching participation

Why it matters: Post-succession morale and engagement are leading indicators of long-term continuity — especially in people-heavy businesses.

4. Customer and Market Health

Customer retention or churn
Net Promoter Score (NPS) or customer satisfaction
New customer acquisition and pipeline value
Customer lifetime value (LTV)

Why it matters: Clients need reassurance post-succession. Tracking loyalty and pipeline ensures revenue doesn’t leak due to uncertainty.

5. Governance and Leadership Cadence

Board and leadership meetings held on schedule
Action items closed out by owners or managers
Budget and forecast reviews completed
Strategic initiatives tracked and reported

Why it matters: Structure beats charisma. This category tracks how well the new leadership team is running the business, not just performing tasks.

How to Set Up Your Monitoring System

1. Create a Post-Succession Dashboard

Use a simple dashboard (Excel, Google Sheets, or BI tool) to track monthly performance across key metrics. Make it visual, easy to update and action-oriented.

2. Assign KPI Ownership

Each KPI should have a clear owner. This builds accountability in the new leadership team and encourages ownership thinking.

3. Establish a Reporting Rhythm

At a minimum:

Weekly team check-ins
Monthly performance reviews
Quarterly board or advisory updates
Annual strategic planning session

4. Keep It Lean but Consistent

Start with a focused set of KPIs. Don’t overwhelm the team with 50 metrics. Track what matters most — and review it every month.

How Governance Supports Continuity

Strong governance keeps the business steady while leadership grows. This can include:

An active board or advisory group
A founder-turned-chair role (with clear boundaries)
External advisors with industry insight
Employee-elected representatives (in EOT or ESOP models)

Governance isn’t just oversight — it’s a support system. It brings challenge, accountability and strategic clarity to the post-succession phase.

Case Snapshot: Building a KPI Rhythm After an MBO

A UK-based commercial services firm transitioned to a three-person management buyout. Post-deal, the new owners implemented a monthly KPI dashboard and weekly team check-ins, supported by a part-time CFO and advisory board. The rhythm kept the business stable, enabled early course corrections — and built confidence with their bank, which had financed the deal. Within 12 months, revenue grew 12% and staff turnover fell by half.

Key Takeaways

The first year post-succession requires focused KPI tracking and strong governance
Financial, operational, cultural and customer metrics all matter
Keep your dashboard simple, visual and updated monthly
Assign ownership for each KPI to build accountability
Use board or advisory oversight to reinforce discipline and momentum
Monitoring is not micromanagement — it’s a leadership habit

Part 4: Regional Insights — Laws, Models and Trends

How Succession Planning Works in Australia, New Zealand, Canada and the United Kingdom

Succession planning principles are universal — but execution is local.

Tax rules, legal structures, financing options and regulatory frameworks all vary depending on where you and your business are based. A strategy that works well in the UK might need rethinking in Australia. An employee ownership model in Canada might require a different legal framework than one in New Zealand.

This section gives you the country-specific context you need to make informed decisions, avoid costly surprises and tailor your succession plan to your local environment.

In Part 4, we’ll cover:

The legal and tax foundations for succession planning in each country
Regional trends in succession, buyouts and employee ownership
Government programs or incentives that support transitions
Structures like Employee Ownership Trusts, ESOPs, and vendor finance — and how they work differently across borders
Common pitfalls to avoid in your jurisdiction

Whether you’re planning a family transition in Auckland, an ELBO in Melbourne, a third-party sale in Toronto, or an EOT in Manchester — this section will give you the insight you need to navigate succession with confidence, clarity and compliance.

Chapter 14: Succession Planning in Australia and New Zealand

Structures, Incentives and Emerging Ownership Models in Two Entrepreneurial Economies

Australia and New Zealand are home to some of the world’s most resilient, values-driven small and medium-sized enterprises. But like much of the developed world, both countries are now facing a significant generational handover:

In Australia, more than 60% of private business owners are over 55
In New Zealand, one-third of all businesses are expected to change hands in the next decade

This creates a major opportunity — and a major risk — if founders don’t plan proactively.

In this chapter, we’ll look at:

The legal and tax frameworks for succession in both countries
Common succession pathways and structures
How Employee Share Schemes (ESS) are used in transitions
The emerging interest in employee ownership and hybrid buyouts
What to watch out for — and where to get help

Whether you’re planning to pass your business to family, sell to your management team, or explore employee-led ownership, this chapter provides a practical overview of what works — and what to watch for — in Australia and New Zealand.

Legal and Tax Foundations for Succession

Australia

Capital Gains Tax (CGT) applies to most business sales
SME founders may be eligible for CGT concessions, such as:
- 15-year exemption (if retiring and over age 55)
- 50% active asset reduction
- Retirement exemption (lifetime cap)
- Rollover relief for reinvestment
Business structures commonly used:
- Private companies (Pty Ltd)
- Family trusts
- Discretionary or unit trusts
- Partnerships (less common for scalable SMEs)

New Zealand

New Zealand has no formal CGT, though sale proceeds may be taxable depending on intent and structure
Tax treatment can vary if assets are sold vs. shares
GST implications may arise in asset sales — careful planning is needed
Trusts are widely used for asset protection and family succession
Share sales are generally more tax-efficient than asset sales

Common Succession Structures

Both countries offer flexibility in succession models. The most common include:

1. Family Succession

Still prevalent but declining as younger generations seek careers elsewhere
Requires thoughtful planning around fairness vs. equality
Often involves restructuring shareholding through trusts or units

2. Management Buyouts (MBOs)

Increasingly popular in well-run SMEs with strong internal teams
Typically funded through a mix of:
- Vendor finance
- Bank lending (secured against cash flow or assets)
- External equity (less common but growing)

3. Employee Share Schemes (ESS)

Available in both countries and can be used to:
- Incentivise key staff
- Gradually transition ownership
- Retain talent during succession
In Australia:
- New ESS rules (updated in 2022) provide tax deferral benefits
- Startup concessions may apply if eligibility is met
- Shares or options must be offered at market value unless within a safe harbour
In New Zealand:
- No formal ESS legislation, but schemes can be designed through company constitutions
- Must comply with Financial Markets Conduct Act (FMCA) exemptions for small offers
- Tax deferral is not guaranteed — seek specialist advice

Emerging Interest in Employee Ownership

Both Australia and New Zealand are seeing early but growing interest in employee ownership models that go beyond traditional ESS.

Key trends include:

Employee ownership trusts (EOTs) being explored as a vehicle for succession
- Inspired by the UK model, but currently unregulated
- Used via discretionary trusts or nominee arrangements
- Often combined with vendor finance or hybrid capital
Hybrid employee-led buyouts (ELBOs) that:
- Transition ownership gradually
- Use vendor finance or impact-aligned capital
- Build in cultural and operational continuity
Supportive organisations:
- Employee Ownership Australia
- Business Council of Co-operatives and Mutuals (BCCM)
- EOB (Employee Ownership Blueprint) movement in NZ

While the legal frameworks are still evolving, the appetite for values-driven, employee-centred transitions is increasing — especially as founders seek legacy, not just liquidity.

Banking and Financing Support

Australia

Major banks are open to MBO financing where there is stable cash flow
Non-bank lenders and private capital are increasingly active
Some state governments offer grants or transition planning support

New Zealand

Bank financing is available but may require personal guarantees
Kiwibank and BNZ have supported MBOs with structured lending
Philanthropic or impact investors are beginning to show interest in hybrid transitions

Pitfalls to Avoid

Failing to engage tax and legal advisors early
Tax outcomes can vary significantly based on deal structure and entity type.
Offering shares without clear documentation
ESS and employee ownership models require strong legal and governance frameworks.
Over-leveraging the business
Succession funding should never jeopardise operations — balance must be maintained.

Treating employee ownership like a feel-good bonus
Without structure, coaching and accountability, it won’t succeed long-term.

Case Snapshot: Hybrid Buyout in Regional Australia

A founder of a successful regional consulting firm sold 60% of their business to three senior employees via a trust and vendor-financed hybrid structure. They used Australia’s CGT small business concessions to reduce tax and structured ESS participation for future employees. The founder stepped back into an advisory role, while the team built out a board and operational rhythm. Result: staff retention grew, revenue increased, and the founder achieved both exit and legacy goals.

Key Takeaways

Australia and New Zealand offer flexible but distinct frameworks for succession
CGT concessions (AU) and trust structures (NZ) are essential planning tools
Employee Share Schemes are available and increasingly used in transitions
Interest in employee ownership models is growing, but requires custom structuring
Engage legal, tax and advisory support early to tailor your plan

Chapter 15: Succession Planning in Canada

Leveraging Tax Incentives, ESOPs, and Evolving Employee Ownership Models

Canada’s SME sector is the backbone of the national economy — and it is facing a demographic cliff.

Over 75% of private businesses in Canada are expected to change hands within the next decade, driven by retiring baby boomers. Yet, only a small percentage of owners have a formal succession plan in place.

Canada offers some of the most attractive tax incentives for succession among G7 countries. And momentum is building behind Employee Share Ownership Plans (ESOPs) and employee-led transitions as business owners seek continuity, purpose, and legacy beyond the sale.

In this chapter, we’ll cover:

Canada’s legal and tax landscape for SME succession
How the Lifetime Capital Gains Exemption (LCGE) can support owner exits
How ESOPs work in Canada, and how to structure them
The emerging ecosystem for employee ownership transitions
Key challenges, best practices, and support resources

Legal and Tax Foundations for Canadian Succession

Business Structures

Most Canadian SMEs are structured as:

Private corporations (most common)
Partnerships (in professional services)
Sole proprietorships (less common in succession-ready businesses)

Succession planning typically involves a share sale or asset sale, with important tax distinctions.

Capital Gains and Tax Considerations

The Lifetime Capital Gains Exemption (LCGE) is the centrepiece of Canadian succession tax planning.

As of 2024:

Business owners can shelter up to $1,016,836 CAD in capital gains when selling shares of a Qualified Small Business Corporation (QSBC)
The exemption is per individual — meaning both spouses may qualify
Eligibility depends on factors including:
- Ownership of shares for at least 24 months
- 90%+ of assets used in active business at time of sale
- 50%+ of assets used in active business over prior 24 months

Tip: Pre-sale planning with a tax advisor is essential to confirm eligibility and prepare the business structure accordingly.

Other considerations:

Asset sales may not qualify for the LCGE
Family trusts and estate freezes are often used to optimise ownership transitions

Earn-outs and vendor finance are common tools to smooth timing and reduce tax risk

Succession Pathways in Canada

1. Family Succession

Still common, especially in agriculture and family-run trades
Intergenerational business transfers can now benefit from new tax fairness rules introduced under Bill C-208 (2021), which:
- Removed punitive tax treatment of intergenerational share transfers
- Improved ability to use LCGE when selling to children or grandchildren
- Requires additional planning and reporting to ensure compliance

2. Third-Party Sale

Often facilitated by brokers or M&A advisors
LCGE applies if shares are sold to a qualifying buyer
Due diligence, valuation, and legal prep are critical for deal execution

3. Management Buyouts (MBOs)

Common in professional services, construction, and manufacturing
Funded via:
- Vendor finance
- Loans from BDC or other lenders
- Capital from private investors or family offices
Often paired with employee share participation or phased exits

4. Employee Share Ownership Plans (ESOPs)

A growing and flexible vehicle for employee-led succession
Can be structured to suit both founders and employees
Usually funded via:
- Company loans to a trust
- Payroll deductions
- Profit-sharing allocations
- Vendor financing to the ESOP trust

How ESOPs Work in Canada

Unlike in the United States, Canada has no single ESOP law — but it does offer a flexible, principles-based environment for structuring ESOPs.

Common components:

ESOP Trust holds shares on behalf of employees
Eligibility rules define who participates and when
Vesting schedules reward long-term commitment
Buy-sell agreements protect both the company and participants
Annual valuations track fair market value of shares

Advantages for founders:

Enables gradual exit
Aligns team incentives
Preserves culture and independence
Often unlocks LCGE tax benefits

Advantages for employees:

Real financial stake in success
Long-term wealth building
Career engagement and retention

The Rise of Employee Ownership in Canada

Canada is experiencing a wave of interest in employee-led transitions, driven by:

Demographic pressure (retiring owners with no successors)
Increasing awareness of ESOP benefits
Emerging steward ownership and purpose-led business models
Government recognition of the need for continuity in local economies

Key Ecosystem Players:

ESOP Builders
Social Capital Partners
Co-operatives and Mutuals Canada (CMC)
BDC and provincial development funds
A growing number of impact investors, family offices and “slow capital” providers

Note: While Canada does not yet have a legal framework for Employee Ownership Trusts (EOTs) like the UK, there are calls for policy reform to support their introduction.

Common Pitfalls to Avoid

Assuming asset sales are more efficient — they may disqualify you from LCGE
Lack of ESOP education and communication — employees need to understand what ownership means
Over-complicating ESOP structures — keep initial plans simple and scalable
Ignoring post-deal governance — ESOPs need proper boards, advisors and reporting rhythms

Failing to get valuation right — independent, fair-market pricing is essential for credibility and compliance

Case Snapshot: ESOP-Funded Buyout in Ontario

A founder of a 45-person logistics company wanted to exit gradually while preserving jobs and culture. An ESOP was created using a trust structure, funded by a mix of vendor finance and company profits. The founder received payments over seven years and retained a minority stake. The leadership team received coaching, governance was restructured, and employees saw annual profit-sharing and share value growth. Employee engagement rose and turnover dropped by 40% within the first 18 months.

Key Takeaways

Canada offers generous tax incentives for succession through the LCGE
ESOPs are flexible tools for management and employee-led transitions
Intergenerational transfers are more tax-friendly under updated rules
A growing ecosystem is making employee ownership more accessible
Engage early with tax, legal, valuation and governance experts to set up for success

Chapter 16: Succession Planning in the United Kingdom

EOTs, Tax Reliefs and Why the UK Is Leading the Employee Ownership Revolution

The United Kingdom has become a global pioneer in employee-led succession, thanks to clear legislation, generous tax incentives, and growing support for values-driven business transitions.

At the centre of this shift is the Employee Ownership Trust (EOT) — a model that allows founders to sell their business to employees via a trust structure, often tax-free.

Since the EOT was introduced in 2014, employee ownership in the UK has grown rapidly, especially among SMEs looking for continuity, legacy, and a purpose-aligned alternative to trade sales or private equity exits.

In this chapter, we’ll explore:

Succession planning fundamentals in the UK
How EOTs work — and why they’re so popular
Other succession pathways, including MBOs and hybrid models
Legal, tax and governance considerations
Key players in the UK employee ownership ecosystem

Whether you’re planning a full exit or phased transition, the UK offers one of the most supportive environments for founder-friendly, employee-first succession.

Legal and Tax Frameworks for Succession in the UK

Most UK SMEs operate under:

Private limited companies (Ltd)
Partnerships or LLPs
Some also use trusts or CICs (Community Interest Companies) for social enterprise models

Succession is typically implemented through:

Share sales (more tax-efficient)

Asset sales (less common in structured succession)

Capital Gains and Tax Reliefs

UK founders benefit from several generous Capital Gains Tax (CGT) reliefs when planning succession:

1. Business Asset Disposal Relief (BADR)

Formerly known as Entrepreneurs’ Relief
Reduces CGT to 10% on qualifying share sales
Lifetime cap of £1 million per individual
Applies to sales to third parties, MBOs, and family members

2. Employee Ownership Trust (EOT) Relief

Allows 100% sale to an EOT with 0% CGT
Must meet qualifying conditions (covered below)
No lifetime limit — can be more tax-efficient than BADR for larger businesses

The Employee Ownership Trust (EOT) Model

What is an EOT?

An Employee Ownership Trust is a structure that allows a business to be sold to a trust on behalf of its employees. The trust becomes the majority owner and stewards the business for the long term.

Purpose: Protect legacy, align employees, and enable fair value exits — without selling to a competitor or PE fund.

Key Features of an EOT

How the Deal Is Funded

EOT deals are typically funded through:

Vendor finance — the trust pays the founder(s) over time from company profits
Bank finance — less common, but possible with strong cash flow
Hybrid funding — combining upfront cash, earn-outs, and staged payments

The business itself generates the funds — not the employees personally.

Why Founders Choose the EOT Path

Full or majority exit with zero CGT
Preserves brand, jobs and culture
Keeps business independent and rooted in purpose
Creates a legacy the founder can be proud of
Allows phased involvement — many founders stay on as Chair, mentor or NED

Other Succession Options in the UK

While EOTs are growing fast, other options remain viable:

1. Management Buyouts (MBOs)

Still popular in sectors like manufacturing, services, and professional firms
Often funded through bank lending, private equity, or vendor finance
Offers more flexibility in deal terms and leadership structure
BADR may apply to reduce CGT to 10%

2. Family Succession

Less common than in previous generations
Requires structured tax planning to avoid gifting issues
Shares can be passed using trusts, estate freezes, or share class structures

3. Third-Party Sale

Sale to competitors, strategic acquirers, or PE firms
Often generates highest price, but may conflict with values or culture
BADR can apply, but often less appealing for founders seeking legacy

Governance and Leadership in EOTs

EOT-owned businesses require strong governance to succeed post-transaction. Best practice includes:

A professional trustee board (may include founder, employees, and independents)
A management team that leads day-to-day operations
Clear roles and reporting lines between board, trustees, and leadership
Employee engagement mechanisms such as:
- Staff forums or councils
- Annual trust reports
- Employee briefings on performance and strategy

Governance protects the integrity of the trust model and helps the business stay aligned with its mission.

Who’s Using EOTs?

Over 1,500 UK companies have transitioned to employee ownership via EOTs, including:

Richmond & Towers (PR agency)
Riverford Organic Farmers (agriculture)
Seetec (training and employment services)
Gripple (manufacturing)
Pennine Healthcare (NHS supplier)

EOTs are particularly popular with founders in:

Professional services
Creative industries
Manufacturing
Healthcare
Tech and digital agencies

Pitfalls to Avoid

Not planning funding early enough — EOTs require solid cash flow and forecasting
Poor trustee selection — trust success depends on clear governance and accountability
Employee confusion or disengagement — employees need education, not just equity
Treating EOTs as a tax dodge — regulators expect genuine employee benefit and governance
Over-promising payouts — keep profit-sharing realistic and tied to performance

Case Snapshot: EOT Transition in a London-Based Digital Agency

A 25-person digital agency in London transitioned to employee ownership via an EOT. The founder sold 100% of shares at market value, funded by vendor finance over 7 years. The company implemented a trustee board with two employees and one independent chair. Staff received £3,600 in tax-free bonuses annually, and the founder stepped into a strategic chair role. The result: increased staff retention, stable profits, and strong cultural alignment — without selling to a larger agency or PE firm.

Key Takeaways

The UK is a global leader in employee ownership, thanks to EOTs and tax reliefs
EOTs offer 0% CGT on qualifying sales and long-term cultural continuity
Management buyouts and family transitions remain viable with proper planning
Governance, communication and leadership support are critical post-deal
The employee ownership movement in the UK continues to grow across sectors

Part 5: Tools, Templates and Stories

Turning Succession Theory Into Action

By now, you’ve explored the full spectrum of succession planning — from mindset to models, financing to follow-through, and from internal buyouts to external exits.

But insight without action won’t move the needle.

That’s why this final section gives you the tools, templates and real-world stories to help you get started — and keep going. Whether you’re building your first roadmap, comparing deal structures, or coaching a new leadership team, this part of the guide is designed to make succession planning practical, not theoretical.

In Part 5, you’ll find:

Self-assessment tools to evaluate your succession readiness
Checklists and templates for planning, communication and governance
Case studies that show how founders like you made it work — and what they learned
Frameworks to support your advisors, successors and stakeholders

This is your go-to section for hands-on planning — whether you’re refining your thinking, briefing your advisory team, or preparing your business for transition.

Use these tools with your accountant, lawyer, coach or internal team. Succession is a team sport — and this is your playbook.

Chapter 17: Self-Assessments and Checklists

Quick Tools to Clarify Where You Are — and What to Do Next

Succession planning can feel overwhelming — especially when you’re not sure where to start.

That’s why this chapter includes practical, diagnostic tools to help you quickly assess your situation, highlight gaps, and start building momentum.

Think of this chapter as your succession health check — a set of simple, focused checklists you can use on your own, or with your advisor, coach, or leadership team.

You’ll find:

A Succession Readiness Scorecard
A Successor Team Readiness Checklist
A Deal Structure Comparison Matrix
A Timeline Planning Tool

These tools aren’t exhaustive — but they’re actionable. Use them to move forward with clarity and confidence.

Succession Readiness Scorecard

Use this quick self-assessment to gauge how prepared you are across the key dimensions of succession.

Scorecard Guidance:

8–10 Yes: You’re succession-ready — time to focus on execution
5–7 Yes: Solid foundation — focus on key gaps over next 6–12 months
0–4 Yes: Now’s the time to start — don’t wait until the pressure’s on

Successor Team Readiness Checklist

Use this checklist to assess whether your internal team is ready to take on ownership and leadership responsibilities.

Guidance:

If you answered Yes to 6 or more, your team is likely ready (with support). If fewer, begin development and coaching now.

Deal Structure Comparison Matrix

Use this matrix to evaluate which succession model may suit your goals.

Tip: Use this with your advisor to weigh up multiple paths before committing.

Succession Timeline Planner

Use this planner to sketch out a realistic transition over 1 to 5 years.

How to Use These Tools

Use them as internal discussion starters — with your team, board or family
Take them to your advisors — and shape your roadmap together
Repeat them annually — to track your progress over time
Adapt them — to fit your business size, structure and culture

Succession is a journey — not a one-off event. These tools are here to help you stay grounded, focused and in control.

Chapter 18: Templates and Frameworks

Ready-to-Use Tools to Support Your Succession Journey

A good succession plan needs more than great ideas — it needs clear frameworks and repeatable tools to drive execution.

This chapter provides practical templates you can adapt to your own business. Whether you’re just starting your planning or already deep in the process, these tools will help you:

Clarify your roadmap
Communicate with confidence
Build post-deal structure
Set your successor team up for success

You’ll find:

A Succession Roadmap Template
A 100-Day Post-Transaction Plan Template
A Communication Plan Framework
A Governance Starter Kit

Use these frameworks with your leadership team, advisors or board — and tailor them to fit your unique goals, structure and culture.

Succession Roadmap Template

This is a high-level planning framework to guide your transition from “thinking about it” to “executing it.”

100-Day Post-Transaction Plan Template

Use this to stabilise and support the business in the first 3 months post-deal.

Communication Plan Framework

Use this framework to shape stakeholder messaging pre- and post-transaction.

Audience	Message Focus	Channel	Timing
Employees	What’s changing, what’s staying the same, what this means for them	Town hall, email, FAQ	Announcement Day
Customers	Continuity of service, confidence in team, founder endorsement	Email, phone, newsletter	Within first 10 days
Suppliers	No changes to terms or relationships, contact continuity	Email or direct call	Week 2
Media/PR	Focus on values, purpose, employee empowerment, legacy	Press release, social media	Post-deal or milestone
Family	Role clarity, expectations, future involvement	Direct meetings	As needed

Governance Starter Kit

A simple guide to post-succession governance design.

Minimum Structures for SME Transitions

Policies to Put in Place

Shareholder Agreement (if multiple owners or new owners)
Delegations of authority (who decides what)
Trust deed or ESOP rules (if using employee ownership)
Profit distribution / dividend policy
Succession of successor — what happens if the new owner leaves?

How to Use These Templates

Use them as-is to start planning today
Adapt them with your team or advisors to suit your unique structure
Revisit regularly as you move from planning to execution to post-deal success
Pair with coaching, advisory, and accountability tools to keep momentum

Summary

Succession planning isn’t just a strategy — it’s a series of decisions, conversations and systems. These templates help turn big ideas into practical steps.

They’re not meant to be perfect. They’re meant to get you started — and keep you moving.

The Ultimate Business Succession Guide For SME Owners in Australia, New Zealand,Canada and the United Kingdom

Business Succession Guide

Part 1: Preparing for Succession — Vision, Value and Letting Go

The Business of Business Succession

Chapter 1: The Fundamentals of Business Succession

What Is Business Succession?

The Most Common Succession Pathways

1. Family Succession

2. Management Buyout (MBO)

3. Employee-Led Buyout (ELBO)

4. Employee Ownership Trusts (EOTs) or ESOPs

5. Third-Party Sale or Strategic Acquisition

What Does Success Look Like?

Why Most Business Owners Don’t Plan for Succession

Start with the End in Mind

Key Takeaways

Chapter 2: The Emotional Side of Succession

Why Letting Go is the Hardest — and Most Important — Part

The Founder Identity Trap

Common Emotional Roadblocks

1. Fear of Losing Control

2. Perfection Paralysis

3. Guilt or Loyalty Conflicts

4. Fear of Obsolescence

Why Avoiding Succession Feels Safer (But Isn’t)

How to Start Letting Go — With Confidence

1. Visualise the Future Without You in Charge

2. Create a Personal Vision for Life After Succession

3. Talk Openly With Your Trusted Circle

4. Shift from Ownership to Stewardship

You’re Not Alone

Key Takeaways

Chapter 3: Understanding and Increasing Business Value

What Makes Your Business Valuable — and How to Make It Succession-Ready

What Is Business Value?

1. Financial Value

2. Strategic Value

The Valuation Formula (Simplified)

Key factors that increase the multiple:

Founder Dependency: The Hidden Risk

Key Value Drivers in a Succession-Ready Business

1. Capable and Empowered Team

2. Documented Systems and Processes

3. Recurring or Predictable Revenue

4. Diverse Customer and Supplier Base

5. Clean Financials and Reporting

6. Cultural Resilience

How to Increase Business Value Before Succession

1. Build and Invest in Your Leadership Team

2. Systematise Your Operations

3. Improve Customer and Revenue Mix

4. Separate Personal and Business Finances

5. Establish Good Governance

Value Is Not Just About Exit — It’s About Optionality

Key Takeaways

Part 2: Exploring Your Exit Options

Choosing the Right Succession Path for You, Your Team and Your Legacy

Chapter 4: Family Succession

Keeping It in the Family — Without Tearing the Family Apart

Does Family Succession Still Make Sense?

The 3 Layers of Family Succession

1. Ownership

2. Leadership

3. Family Dynamics

Common Pitfalls in Family Transitions

1. Assuming Instead of Asking

2. Waiting Too Long

3. Confusing Fairness with Equality

4. Lack of Structure or Governance

Designing a Successful Family Succession

1. Have the Hard Conversations Early

2. Separate Ownership from Leadership

3. Use Independent Assessment and Coaching

4. Create a Succession Timeline

5. Document Everything

6. Establish Governance Structures

Dealing with Fairness and Legacy

When It Doesn’t Work

Key Takeaways

Chapter 5: Management Buyouts and Employee-Led Buyouts

The Ultimate Business Succession Guide
For SME Owners in Australia, New Zealand,
Canada and the United Kingdom