Talkin’ ’bout my generation…

By Desmond High

We’ve recently seen one local professional firm go into administration and, although it is blamed specifically on the loss of a personal injury claim contract, it comes as no great surprise. Looking at my current workload, it does seem to feature an increasing number of what might uncharitably be called “distressed gentlefolk”.

Unfortunately a growing number of partners in small professional practices are finding that the agreeable run-down to a sunny retirement enjoyed by their predecessors is no longer available to them, and that there are few, if any, young thrusters keen to take over the reins.

In the commercial world, owner/directors who had assumed that some plc would pay them a load of cash when they came to retire are similarly discovering that the value of their business will not produce the crock of gold they had been expecting.

For many in both sectors, visions of endless days on the golf course or round-the-world cruises are fast disappearing.

There is now a generation – which, rather alarmingly, seems to be mine – in their late 50s or early 60s for whom it may be too late to do much about it. But the lesson for the next generation of business people is not to put all the eggs in one basket. Many, particularly in the professions, have already sensed that and are showing a reluctance to take over at the top, preferring to remain salaried without the responsibility of ownership.

For those in the commercial world, it may be unwise to assume that selling the business will automatically provide the pension. Better to spread the risk as early as possible. For example, if you want to secure a freehold commercial property for the business, buy it privately, or in a pension fund, and rent it to the company.

Always look for succession early and if it doesn’t seem to be there, make plans to sell. And once you’ve passed 50, consider taking out cash to invest elsewhere, and regard any value on eventual sale as a bonus.

? The EMC Exit Scorechart helps business owners to identify how attractive their business currently is to a potential purchaser. It represents a first step in creating an action plan for the two to five years prior to sale which has, as its prime objective, the maximisation of the value of the business. For details, contact Desmond on 01622 685734 or email desmond.high@emcltd.co.uk

October 2012