Business Succession is a formal hand-off of the effort, time and creativity that you have invested in your company to the next generation of leaders.  It can be very difficult to consider especially if you really love your business and your career.

Creating a Business Succession Plan is crucial to the future profitability of your business and to maintaining its current value.  

Many business owners are depending on the value of their business to fund their retirement. In addition, families are often counting on the business to fund college educations, medical expenses and more.

Fewer than 10% of all businesses have a formal, written plan.  52% have no plan at all.  (Canadian Federation of Independent Business)

The leadership of 39% of family-owned businesses will have changed hands in the next five years.  (Raymond Institute/MassMutual, American Family Business Survey, 2003)

19% of family business participants have not completed any estate planning other than writing a will; only 37% have written a strategic plan; and over 60% are very positive about their company’s future. (Raymond Institute/MassMutual, American Family Business Survey, 2003)

85% of family-owned firms that have identified a successor say it will be a family member.  However, fewer than one-third of family businesses survive the transition from the first generation to the second—and only 13 percent remain in the family for more than 60 years.  (Raymond Institute/MassMutual, American Family Business Survey, 2003)

If NO succession planning is done, the IRS, heirs, lawyers and any co-owners will take over.

In a smaller business, the CEO/Founder/President/Principal is often the business expert and profit driver, and when he or she leaves unexpectedly, the value of the company may greatly decrease.  For that reason, it is IMPERATIVE that estate planning and Business Succession Planning be addressed far in advance of an emergency to protect the heirs and other business stakeholders.

Once retirement is financed by the plan, other issues to consider are ongoing management, ownership transfer, and taxes.  Developing a buy/sell agreement as part of the plan can be a strong strategy to counter crises such as divorce, death, departure, and disability.

The main problem is that few transitions occur while the founder is available (or alive), making transitions much more difficult, prone to higher failure, and much more painful.

Planning should ideally begin when the CEO or business owner is between the ages of 45 and 50 if he or she plans to retire at 65. Since succession can be an emotional and complex decision, we can help you, your family and your key managers work through the issues objectively.  It needs to be a team effort focused on the personal, financial, legal and tax issues.

Business Succession Planning is essential for your peace of mind, ongoing business operation, tax reduction and securing maximum value from your business. Through appropriate succession strategies, you can avoid family discord, business problems, and ensure your legacy—your business.

Schedule an introductory meeting with us today to review your situation and needs.

Reference for Business:  Management Succession Planning Fundamentals