As extensively discussed elsewhere, baby boomer family business owners who aim to exit and obtain maximum value are facing a ticking clock. It is crucial for these firms to establish succession plans within the next three to five years. Business advisors have long cautioned against the danger that a wave of business sales driven by baby boomers could depress prices. For these founders, the risk is that they might be left without a chair when the music stops.

Part of the challenge is that many founders associate succession planning exclusively with retirement, rather than regarding it as a business evolution. What becomes more crucial is ensuring continuity in the business, guaranteeing smooth operations from one generation to the next, whether the next generation comprises family members, existing employees, or third parties.

It is widely acknowledged that business owners have a limited period in which they can extract the maximum value from their business before exiting. For baby boomer family business owners, this window is rapidly closing, and succession plans should be put in place within the next three to five years to ensure continuity in the business. Many founders, however, view succession planning as a retirement strategy, rather than an evolution of the business, which could be detrimental to the future of the company.

There are options available to business owners, such as selling up or expanding the business through acquisition of other firms. However, the latter strategy requires a solid supporting strategy for successful implementation. As advisors, it is necessary to analyse not only historical financials, multiples and assets, but also to consider the future vision and initiatives required to achieve strategic goals of the merged entity.

Ensuring a successful merger cannot be guaranteed by adhering to fixed rules. However, past merger experiences can provide valuable insights. Analysis of such experiences can reveal how certain post-merger integration scenarios can create challenging starting positions for the companies and managers involved.

In the realm of post-merger integration (PMI), risks can generally be grouped into four categories: synergy, structural, project, and people. The success or failure of a merger can vary greatly, but can be summarised in terms of these categories. If all four categories are thoroughly evaluated and managed, the risk of PMI is considered low, and 75% of such mergers are historically considered successful. Conversely, poor management of these areas leads to up to 99% of mergers falling short of expectations, resulting in a loss of business value.

To achieve strong post-merger returns, a thorough process is necessary. Successful PMI begins well before final sign-off, during the due diligence phase, and typically continues for months or even years after the settlement date. Addressing the risks outlined above requires systematic project management, from preparation through implementation and after-care.