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Succession planning guide

Our succession experts can give you free advice on ways to exit your business. Alistair Gibb, a succession adviser, explains the main options available to business owners in our series of short videos.

Find out about succession planning for your business in this video guide from Co-operative Development Scotland, the arm of Scotland’s enterprise agencies that supports employee ownership and co-operative business models.

It’s worth investing the time to plan for succession well in advance. Learn about the different options available, including trade sale, employee buyout, ownership transfer, flotation, management buyout, and more.

Business succession planning

Many business owners leave it late to plan ownership succession and this can be a real source of stress.

With so much at stake, it's best to plan for succession well in advance. Doing so usually means having more exit options and gets a better result for the owner, employees and the business.

Learn more in our first video:

Key points

  • Plan for succession well in advance
  • As an owner, planning in advance means you’re likely to meet more of your personal goals
  • Get good, professional advice at the right time
  • Transferred businesses tend to outperform start ups in relation to survival, profit and employment
  • Many business owners aren’t aware of all the succession options available to them

Ownership transfer within family businesses

Families control many UK firms and that brings an added layer of complexity when the time comes to transfer ownership.

Find out more in our next succession planning video:

Key points

  • Proper planning and communication can help with potential family feuds
  • Consider developing separate strategies for ownership, for the management of the company and for the family
  • Separating the various interests and teasing out the true objectives of each party is often best done by an independent person, who’s not emotionally involved

Company buyback

Company buyback is one form of succession planning, where a company can buy shares back from a retiring owner.

Learn more in this video:

Key points

  • You’ll need to think about how the company will be managed in the future after you leave
  • A buyback can only be done if the company has sufficient funds and can afford to make the purchase
  • Get advanced clearance from HMRC, to ensure that the proceeds will be treated as capital, rather than income
  • Get professional advice for this sort of transaction
  • It can be a relatively speedy and inexpensive way to release a shareholding


Floating your company on the stock exchange means the shares will be available for purchase by the general public and other investors. Of all the possible exit options, flotation usually brings the best price.

Learn more about flotation in our next video:

Key points

  • Flotation usually brings the best price of all the exit options
  • The company can issue new shares to use as takeover currency and to incentivise staff
  • Flotation costs are high, usually in excess of £500,000
  • There’s an extensive due diligence investigation and it can take a long time to plan a flotation
  • After flotation, performance levels will need to be kept high, or the share price could suffer, and investors lose out

Management buyout

It’s worth taking time to find out if the management team would be interested in a management buyout (or MBO). Sometimes, management teams don’t get the chance to make an offer and that could be an opportunity missed.

Find out more in this video:

Key points

  • A management buyout is where the management team buys out the owner
  • It can be an efficient and convenient way of passing on control for all concerned
  • Finding enough money to buy out the owner is often the problem, but there are lots of options available, including deferred payment and bank or private investor funding
  • Negotiations and due diligence can take time and there will always be legal fees

Shareholder sale

Although not very common, selling your shares to another shareholder can be an excellent way to exit a business. It can be easy, quick and cheap.

Learn more in our video:

Key points

  • It's not very common, but selling to another shareholder can be easy, quick and cheap
  • A fellow shareholder will be familiar with the business and won’t normally need to do investigations or due diligence
  • If you’re thinking about this option, check the company’s articles to see if it’s possible
  • Not every buyer is a natural CEO, so could the buyer run the company without you?

Trade sale

A trade sale is a type of succession planning where you sell your business to a competitor. It's the most common way of selling a company and can be an effective way to hand over control.

Learn more in our video:

Key points

  • A trade sale is the most common way of selling a company and can be an effective way to hand over control
  • Putting two similar businesses together brings economies of scale and reduces competition
  • It’s sometimes hard to attract the right buyer at the right price
  • To do a trade sale well takes patience – it also costs money and it can cause some disruption to the business
  • An experienced adviser can help you to find likely buyers and prepare sale documents

Employee buyout

An employee buyout (or EBO) is a succession option where the owner’s shares are passed into a trust for the benefit of the employees. An EBO is often overlooked but has many advantages.

Find out more in the final video in our series:

Key points

  • An EBO has many advantages - the owner controls the process from start to finish and employees don't have to come up with cash personally
  • The company itself pays for the shares and transfer can take place over a number of years to reduce financial distress on the company
  • It’s a great option for owners who want to reward employees for their contribution
  • Employee motivation and productivity often improve
  • It helps preserve the businesses culture, by reducing the chance of takeover
  • An EBO causes little disruption to the business

Looking to speak to an expert?

Once you've submitted your enquiry, one of our succession specialists will be in touch to discuss your needs.  To help inform this discussion we'll ask for a copy of your business plan and, if available, the last three years' of your company accounts.

Submit an enquiry