Succession Planning

The key to a successful Succession Plan is to plan ahead. Business owners are so engaged in the daily operations of their business, that planning for the eventual transition of the business is often neglected.

The time to start is NOW, or, at minimum, two-three years prior to ownership transition. Even if this time frame sounds too soon for some, having a plan in makes good business sense. Circumstances such as personal health issues, change in market conditions or the receipt of an unsolicited offer may force this situation sooner than anticipated. Having a plan in place, ready to execute can help make the transition a smooth one.

When preparing yourself and your company for succession, it is wise to seek the advice of professionals. This means forming a divestiture team of experts in the areas of law, income tax, financial planning, as well as an experienced business intermediary to guide the whole process. Choosing the right team will help you gather the right information, at the right time, to make the right decision for you and your business.

There are many considerations:

• Will the transition be to a family member, key management/ employees or a strategic buyer?
• What are your personal circumstances such as your health, level of interest in the business, financial situation of yourself and the business? Are you ready to let go of your business that you have worked so hard to build for so long, or do you need to ease your way out over a period of time?
• Have you implemented advantageous income tax and estate planning initiatives to maximize the value of your business while minimizing the tax impact?
• Is the company reliant on your skill, expertise, client/vendor relationships in order to be successful?
• Are you prepared to commit to a transition period anywhere from six months to three years in order to facilitate the sale?
• Is your business operationally and financially structured properly to sell?
• Is your business positively/negatively affected by current or anticipated changes in the economy, industry or local market?

Related article: Selling Your Business is Like Running the Marathon

Let the experts at Robbinex help. Call us for a confidential consultation today at 1-888-ROBBINEX or email kristine@robbinex.com.