BUSINESS SUCCESSION PLANNING

Who is Involved in Succession Planning?

There are many different factors to consider when planning the passing on of a business, so succession planning involves several parties. Depending on the people involved in a business and the business’ complexity, it might be necessary to include:

• Partners or fellow owners, as they have a vested interest in the business
• Key employees, especially if the business can’t be run without them
• Certified public accountants (CPAs), who can explain tax implications of various options
• Lawyers, who can get all necessary legal paperwork in order
• Financial advisors, who can help explore the potential financial consequences of different decisions

In some cases, even competitors are involved in succession planning. Including competitors may sound counterintuitive or foolish, but they’re sometimes the people most likely to purchase a business -- especially if the business is owned by only one person and, therefore, there aren’t partners who may be interested in acquiring a bigger share of the business. Competitors already know the industry, and some might be interested in an opportunity to grow their own company.

Financial advisors are often the first people business owners and partners talk to about business succession planning. While they usually recommend bringing additional professionals who have expertise in other fields (e.g. CPAs and lawyers) into the conversation, financial advisors are usually able to both help business owners begin to think about the questions associated with succession planning and suggest other professionals who may be able to provide assistance.

Wrapping it up 

All businesses need at least one competent leader who can run and guide the company. Without someone who has the expertise and skill to manage all aspects of the company, businesses large and small will fail -- and that presents real challenges for lots of businesses. Many businesses are not prepared for an owner, partner, or key employee to unexpectedly retire, become ill or pass away. Business succession planning helps businesses prepare for unforeseen, but possible, events like these.