Business Succession Planning is the process by which a business owner plans for the successful transition of his business at maximum value; thus achieving the highest return possible for what is typically the largest component of his personal assets and life’s work. By planning for succession, its liquidity and marketability will be increased.
When the owners of a business slow down, retire, get seriously disabled or die, a change in management is almost always necessary. Yet, at this stage, most business owners would rather not think about the need to do any planning. The business requires more effort and resources to deal with the crucial issue of business continuation. At this time also, business owners are on the look-out for hostile takeovers by others.
Succession planning is important for all businesses, no matter how distant the actual succession may be. A succession plan is a formal process that determines how a business will be transferred to others during the lifetime or upon death of the owners. It outlines the steps necessary in case of feuds arising among the partners. Preparing early for such a plan is important, even if you don’t plan to retire soon. An unforeseen event could suddenly make it impossible for you to continue operating your business.
Are these your concerns?
- I am running a family business with constant family feuds among my siblings. What would be my Exit and Cashing-out strategy?
- How to pass the baton to the next generation?
- My business is picking up. How do I prevent quarrels over money issues among my partners and plan for our Corporate Will?
- How do I plan to exit and still have a consistent income after that? Will my partners allow it?
- My partners are older than I. They will probably leave the business first. What will happen to their shares? I do not wish their family members to succeed them and become one of the partners.
- I plan to start a business with my friends. What kind of agreements should I put in place to prevent misunderstandings in future?
- Will my partners extend the same perks that I am currently enjoying to my wife upon my death? How do I make sure that my surviving partners do not short-change my wife?
- How do I protect my company from the effects of death and disablement of Key Persons in my company?
- I have Muslim partners in most of my businesses. What implications would their death have on the businesses? How would the Syariah Law of Distribution affect me and the businesses?