Succession planning is a significant issue for business owners, with a range of economic and business factors placing increased emphasis on proper planning. Many find that they have left succession planning too late and do not have adequate plans in place.
Transferring the ownership and management of a family business to the next generation is not straight forward. Handled poorly, it can destroy wealth and family relationships, but handled respectfully and in good time succession planning yields benefits for many future generations.
Careful planning helps reconcile different family interests and expectations, resolve awkward tax and financial issues and ensure continuity of the business. Events such as marital breakdown, sudden illness or death can greatly complicate matters for the unprepared.
These events, and the forced change of ownership that can result, have the potential to derail even the most successful of businesses.
What is succession planning?
Succession planning is about business owners preparing for a change in ownership, whether expected or not, to:
- minimise disruption to business operations
- provide financial security to the business
- minimise the potential of the business needing to be sold to external parties, and
- ensure that the business ownership is transferred in the most tax effective manner.
Being proactive and putting in place a Succession Plan to manage changes in ownership can be both daunting and overwhelming. There are many aspects to consider when developing a good succession plan:
- Who will be your successor(s)?
- How much is your business worth?
- What sort of management strategy should you adopt for existing staff to ensure a smooth transition?
- How will your departure affect key business relationships such as suppliers and major customers?
- Do you need to establish an estate plan or Will?
- Do you need provisions for active and non-active family members?, and
- How much income do you need to retire or leave the business?
Murray Nankivell has been successful over a long period of time in helping clients put in place effective succession plans, using the approach below:
- Evaluate your business
Determine your succession needs
- review your business' financial position and performance,
- calculate its market value and if applicable,
- work with you at implementing strategies to maximise its value in the market.
Prepare your Succession Plan
- work with stakeholders to review potential changes of ownership, insurance needs, corporate governance issues and the business implications. The key here is to be transparent and ensure that all personal succession plans and aspirations are taken into consideration.
- a tailored succession plan is prepared for your business and the individual stakeholders' requirements.
- work with legal representatives on your behalf to ensure that your legal documents including Shareholders/Partnership Agreements and Wills are prepared in accordance with your Succession Plan.
When necessary we use or recommend mediation professionals to compliment our services.
The Murray Nankivell approach aims to reduce the stress of such an activity, so that you can focus on the ongoing success of your business and family relationships.
For more information or to make an appointment to discuss how we can assist you and your business please contact your local Murray Nankivell office today.
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