Blogs

No Skeletons In The Closet

• Apr 21, 2023

Are you excited about getting into business ownership but concerned about the security of future business revenue if you buy outright? Are those contracts secure and will the revenue still flow into the business when the owner exits ?

Are there any skeletons in the closet you don’t know about and is the owner desperate to get out now ? Do you really want to put all your investment “on the nose” on day one and step into the unknown without the owner having a vested interest too ?

The Business Owner Transition model is a way to buy into a business over time in a way that de-risks any transaction .

 Why?

• You work in the business on a salary for 3-6 months before you buy shares.
• While you have done some due diligence before you commence, you then get to validate the DD and “look under the bonnet” before you transact.
• The owner is still a shareholder in the business and must believe in it otherwise they would not go through the process.
• We tell owners to ensure there are no skeletons in the closet.If there are any, the incoming person will find them in the first 6 months which will compromise any deal occurring.
• You have the benefit of the owner’s knowledge and relationships over a longer period.

Business Owner Transition is an effective way to get into a business while minimising your risk. We expect it to become a common way to exit a business over time and it is a compelling solution for entrepreneurial people looking at business ownership.

About the Author

Mike Warmington is a Director of Platform 1 NZ Ltd - The New Zealand market leaders in business owner transition. Platform 1 specialises in using executive search techniques to find people with capability and capital for business owners wanting to transition.

www.platform1.co.nz