Canadian business owners should consider a phased exit as a retirement strategy, according to a leading private equity firm. VenGrowth Asset Management Inc.’s Succession Planning Kit launched this week highlights the options available to Canadian business owners looking to maximize both financial and personal interests upon leaving their company.

“For many entrepreneurs, simply walking away from something they have spent years nurturing and building can be a difficult proposition, both in a business and emotional sense,” says Graham McBride, VenGrowth Managing General Partner. “Our Kit explains an alternative that can enable entrepreneurs to phase out their operational and/or ownership control over time, an approach that can not only make it easier to ‘let go’ but can also help realize the maximum value for that business at the end of the day.”

A phased exit, or “partial buyout” typically involves the introduction of a financial partner that will provide capital on the business’s balance sheet in one form or another, taking on a portion of equity and a portion of risk in the business. Entrepreneurs can retain control over the business and the potential for further upside, while taking some personal risk off the table.

“There is a real benefit here for business owners in the sense that they can liquidate some of their hard work and secure some the upside that has been built up over the years,” McBride says. “The business owner also gains a partner who shares the same ultimate goal: maximizing the value of the business when the time comes for a full buyout. Often the financial partner will bring things to the table that help to increase that end value.”

The phased exit enables business owners to start the succession process while they are still heavily involved in their business – a key recommendation within the VenGrowth Succession Planning Kit. The Kit addresses many of the key concerns of succession planning, including the questions that every Canadian business owner should be asking themselves in preparation for a successful exit.


www.vengrowth.com.

http://www.newswire.ca/en/releases/archive/September2006/21/c8700.html