Succession Planning Is Important

A succession plan creates an expectation of the future, manages associated risks, and helps prevent any animosity amongst family members and other key stakeholders. Succession planning involves a number of interrelated items which need to be considered if the family business is going to be able to continue following the retirement or sudden unavailability of the owner or other key management personnel.

The type of items which need to be considered in the development of a succession plan includes:

• List of the secrets of the business
• Has appropriate key person insurance been effected on key personnel?
• Is there a Buy/Sell Agreement?
• Have the key people in the business all prepared Wills?
• Who are the Executors for the key shareholders?  Do the people appointed as Executors understand the dynamics of the business?
• Has management succession been considered?  
• What will be bankers' and suppliers' reactions if a key person dies?  
• Has there been ‘mates agreements’ negotiated with suppliers?

Consider the development of employees.  Have job descriptions been prepared?  Are non-family members considered for executive positions?  What business training strategies have been introduced for employees - both family and non-family?

Is there a Family Charter or Constitution?

A succession planning review should also consider whether the corporate structures are suitable.

Have the current business owners and management instigated independent retirement planning?

There are many issues involved in succession planning.  Many business people ignore or put off succession planning.  However it’s a very important issue that should be considered by all business operators so as to ease their family's worries and concerns in the event of their premature demise.

We can assist you in the development of a succession plan for your business.