Business Succession

Business Succession Planning is of critical importance to all small business owners.  There are two key areas of Business Succession Planning and we will explore both briefly.  

Firstly, it is the process of identifying and developing people within the business with the skills and potential to eventually fill key positions in the business when the incumbents resign, retire or leave due to other circumstances.  

Secondly, it is also the process where an owner plans for their departure from the business due to retirement or to pursue other opportunities.  In the life of a small business owner, the decision to sell a business or to retire and exit gracefully cannot be implemented instantly.  It will usually involve a lot of planning and require weeks, months or even years of preparation.  Take retirement for example……. A business owner decides to retire in 2 years’ time and needs to make a number of preparations for that to occur.  Some of these decisions include:

a) Do they sell the business?  If so, when should it be listed for the owner to retire in 2 years’ time.

b) Is the owner going to remain in the business after the sale in a management or mentoring capacity?  If so, what remuneration arrangements will apply.  

c) Is the business going to be sold or given to a family member?  If so, what training and development plans need to be made to ensure the potential new owner is in a position to take over at the appropriate time. 

d) What assets will be included in any potential sale?

e) What training and development requirements need to be considered for other key staff to ensure a smooth transition following any sale?

f) If the business is a single operator arrangement, then will it cease to exist upon the retirement of the owner?  As such, what arrangements will the owner make to ensure their existing loyal clients continue to receive the service they have become accustomed to.

……. this is list is not exhaustive, but merely highlights some of the issues a business owner must plan for and consider prior to their departure.  

Each of the points listed above have some legal consideration in terms of the business owner’s rights and obligations.  Consulting with your CLO lawyer will ensure that you can plan for your retirement or new opportunities and know that you have prepared for all contingencies.  

To talk more about Business Succession please talk to the team at CLO Lawyers today.