A succession plan is a written document providing for the continued operation of a business in the event that the owner, or key member of the management team, leaves the company, is terminated, becomes incapacitated, retires, or dies. It details the changes that will take place as leadership is transferred from one generation to the next. Business succession planning is complicated because it requires individuals to make difficult decisions out of context while carefully considering the realities of the business, and involvement of family members or key employees in the business. Some issues an owner may have to address are:
- Should the business continue if the owner dies or is no longer able to manage the business?
- What is the owner’s timeframe for the transition?
- When and how does an owner select a successor from among several key employees or family members?
- What impact will a buyout of the owner’s interest have on the cash flow of the business?
- How is the ownership of the business properly priced?
- Will there be a payout over time? How long a period of time?
- How can problems be avoided during transition when an owner’s share of the ownership drops below 50%?
- Should the current owner(s) remain on board during the transition and gradually reduce daily involvement? Should the current owner(s) end involvement without a gradual reduction in time spent in the business?
Succession should be viewed as a process rather than as an event. It is not an all-or-nothing scenario, and can be done in incremental steps over a period of months or years. Porter Law Group guides clients through four main stages in the succession process: initiation, selection, education, and transition. We will ensure that logistics and planning of an eventual transition are considered well in advance, and provide a blueprint of the entire process, to make the process easier and more effective. Porter Law Group will map out the process alongside you, while allowing for necessary changes along the way.