Business Succession
Only three out of ten businesses survive to the second generation and only one of those three survives to the third. Even fewer than that have a business succession plan. If they did, the businesses might continue to prosper.
Because the process of planning for and implementing the transfer of a business can take several years, the time to start planning for the future of your business is now. What will happen to your business beyond your lifetime? If family members will be taking over the business, who will they be? How will they assume control, how much control will they assume, and when? And if family members aren't able or willing to run your business, will you sell it?
If you sell your business, many options exist. Will you sell part of the business, or sell some now and transfer the rest over a period of time? Will you sell it to staff or management, to an outside purchaser, or on the stock exchange?
Whether transferring ownership to the next generation or selling the business, you need to consider tax implications and whether the plan-for transition is set up to go as you intend. Some of the tools you can use to plan the succession of your business are:
- An updated Will;
- A plan for preparing and introducing your successor(s);
- A shareholders' agreement;
- Appropriate insurance; and
- A business mission statement.
