Succession planning is a topic we evangelise at Advantage Business. Our advisors strongly advocate for most forms of planning. Looking at the flip side, however, what good are the best-laid plans when a pandemic comes along? It has run roughshod, right through many succession plans. Let’s take a deeper dive into how many business owners have been affected and what you can do now.

The need for succession plans

Let’s first look at why we create succession plans. There are several reasons but two main drivers.


  • The owner’s perception of the value of their business compared to the value that they want to achieve for the business.
  • The desired outcome – this is not always about money but business value is often front-of-mind, with the goal of exiting your business for fair market value a common objective.

Both points above are more complex when more than one owner is involved. Consider the stage each owner is at in their mind. They will seldom be the same.


  • Events and life changes can and often do influence the timing of succession planning and execution.
  • As discussed in my blog on the impact of COVID-19 on business, there have been three concurrent impacts that continue to be felt by most businesses in New Zealand. The main change I’ve seen since I wrote that blog is for some clients, social distancing in the workplace has been replaced by staff absences. This winter is the first one in which New Zealand is operating with an open border since March 2020.  Our resistance is lowered so it seems we are more susceptible to the flu and other winter ailments, not to mention Covid-19.


The impacts of COVID-19 on succession

Firstly some key observations on the current situation in New Zealand:

The business impact of Covid, from profitability, cash flow, and a business value perspective has been:

  • Uneven, and often dependent on the sector that a business operates within.
  • Driven by the resilience of the customer base of a business. For example, my clients who have a strong infrastructure, or healthcare customer base have fared much better than businesses with a client base in the travel, events and hospitality sectors.
  • A number of our clients have had excellent, if not record profit years since the pandemic. These clients have both retained and increased their client base, retained their people, and worked hard and smart on both retaining their business culture, and refining their market offering.
  • We have assisted many businesses with both funding and the sourcing of business acquisitions – they are growing!

My colleagues and I are seeing Succession plans impacted in the following ways:

  • Time frames have either decreased or increased as required, to achieve the target business value.
  • A shorter timeframe is desired by business owners who have either left it very late to exit their business, or have not had a succession plan in place.
  • The important discussions to determine whether or not family members are willing and able to become the next owners of the business have taken place.
  • For some business owners, health, family and life purpose factors have changed, and are driving their decision to exit.

It is my observation that this pandemic continues to exhibit five key traits. These have many impacts:

  • Uncertainty
  • Resilience and stress
  • Continued issues with accessing talent when needed
  • Ongoing supply chain disruption with longer lead times
  • A need to accelerate innovation.


The evidence

I’ve gathered these observations while working with my clients and the various businesses within my network (both direct and indirect). They tell me that the factors described above are very much in play. While these factors are not new, COVID-19 has brought them into sharper relief.

The old saying ‘never waste a good crisis,’ is still also alive and well. Here’s what I’m seeing:

  • Through either necessity or as a risk management strategy, owners are examining all opportunities, resources and goals (short-term, medium-term and long-term). They are ensuring everything is working as well as humanly possible within their business. Any complacency that may have been present is gone.
  • At the same time, successful business owners who have time, money and underutilised capital are actively looking for additional business opportunities. Suitable candidates may be stressed businesses that can be acquired for a bargain price, complementary businesses, or both.
  • Joint ventures are also being increasingly used, as a try-before-you-buy period. They allow business partners to assess their true competence and fit before committing hard-won capital and intellectual property to another enterprise.


Which industries are most affected?

The impact is right across the business community, regardless of industry or business size. No business is immune to current New Zealand or global economic conditions.

  • As stated above, the impact on any business is often determined by the sector in which it operates, as well as being driven by the resilience of the customer base of a business. For example, my clients who have a strong infrastructure, or healthcare customer base have fared much better than businesses with a client base in the travel, events and hospitality sectors.
  • In addition, genuine innovation opportunities are presented to many businesses and are relentlessly pursued by business owners. I’d like to share with you a superb inspirational clip championing innovation. It shows how the Bugatti Chiron smashed the 300mph speed barrier.


How to rework your succession plans

There are some clear guiding principles you can apply to succession planning in the current economic and business climate:

1. Be considered

Although it may seem obvious, there is no point in panicking. As a mentor of mine once said: “there is never any point in panicking, but if you must panic, panic slowly.”

  • Assess where your business is damaged, and what can be done to minimise the damage and build from there.
  • Take stock of the situation and do what has to be done. Take a moment to watch a great example of triumph over adversity ”It’s not possible – no it’s necessary!” The docking scene from the movie Interstellar.
  • At the same time, if you are experiencing rapid growth in areas of your business due to market opportunities, you need the ability to fund that growth. You may also see and be pursuing the acquisition of a business to add to your market presence and breadth of market offering. In these cases, call me. I have assisted many businesses over the years to get the growth and acquisition funding they need, including during and since the recent lockdowns.

2. Systematically review your current succession plans

  • Your current plan is an excellent base to work from. Consider what has changed, what is needed, and which elements are still valid.
  • What are the new opportunities that are either apparent or emerging?
  • Make time to review your current plans and ensure that you involve all the key parties in this process. Especially if you have brought in new key players to the business since your plans were formulated.


Getting started

If you don’t have a succession plan for your business, there has never been a better time to get started:

Start early

New Zealand SME business owners tend, in my experience, to be somewhat reactive when it comes to succession planning.

The later succession planning is started, the lower the exit value tends to be.

That is because:

  • There is often less time to formulate and execute an exit from the business. This tends to limit both the number of options available and can often provide an impression of haste, which tends to drive down the achievable exit price.
  • Without allowing sufficient planning time, the decision taken by a business owner can be rushed. That produces a less than ideal outcome.

Consider what you want to achieve, whether it’s possible, and how and by when you can do it

  • Take stock of the current market position that your business holds. Is this position improving or eroding?
  • Do you have the skills within your team, and the business capability and financial resources needed to exit your business for the value that you wish to? If so, by when and how?
  • Conduct a gap analysis of where you are now versus where you want to be. Establish a realistic timeframe to get there.

Be flexible and agile

A major portion of your business value, now and in the future, will be driven by your ability, and that of your team, to be mentally agile. You must respond to changes in your circumstances and act on data that is at times incomplete. Above all, you must retain perspective and maintain motivation; both for yourself and your team.


Next steps

If you would like my help with succession planning, reach out to me if you’re in Auckland. If you are outside of the Auckland area, make contact and I will discuss your needs and location to determine the Advantage Business Advisor who can best assist you. Succession planning is a process we are all experienced with. Nothing can beat familiarity in this space and most business owners only get one chance to do it right. Using a trusted advisor as a sounding board is often crucial to success.


By Murray Fulton | Director and Partner | Business Advisor