One day your business will change hands and it is always better to be prepared...
This member driven "top of mind" event brought manufacturing business Executives, Owners, Directors and their Families together to gain new and/or different perspectives on the process of Succession Planning.
In partnership with Miller Thomson and BDO, this session focused on the 360° approach to succession planning that includes principles and technical elements that should not be overlooked when selling, or passing shareholder assets to new owners from both a legal and financial standpoint. This event provided relevant guidance that is suitable for arm’s length and non-arm’s length, Family enterprise, engaged shareholders and/or new third party eventual transitions.
Here are the highlights of the key 360° principles of a good succession plan:
Communication, Communication, Communication - The conversations are necessary and important. Start with evaluating your core values and creating your Family Vision. With your Family Vision in mind you can than create the appropriate policies & procedures.
Organizational Design – Establishing and knowing the roles and responsibilities of each individual in relationship and in the execution process is crucial. Accountability will add stability to the process and ensure that matters are carried out most effectively. Part of the conversations should include not only compensation; it should include people development in preparing your leadership for success.
Estate & Tax Planning – there is plenty of due diligence and number crunching that needs to take place to make sure that the business holds and protects the best value possible during the transition. Consideration of the following components of your planning are very important: Wills / Trusts / Estate Freezes / Holding Companies / Wealth Management / Retirement Planning, Valuation & Disposition of Assets /Shareholder Agreements/Governance on Entrance and Exit strategies…
Protecting the people that run your business and protecting your Family – Quite often family members are also the people that run the business and this protection can overlap. Family Law & Marriage Agreements, Risk Mitigation in the event of death or illness, Employment Law and Contracts also should be reviewed to ensure they meet your needs and those you expect to take charge in the event of an unfortunate circumstance while protecting everyone's interests too.
One day your business will change hands and it is always better to be prepared than to have to clean up or catch up on what should have been put in place. This becomes extremely important especially from the emotional perspective when those left behind may also be dealing with an unplanned “departure” which makes things even more difficult and stressful to manage.
Building your Succession Planning Team.. Legal and Financial are two very important aspects of succession planning and yet there is more involved to a proper succession plan such as Insurance, Wealth Management, Funeral planning, honoring due respects and last wishes and more… The Experienced Professionals from these two firms would be happy to hear from you to further share their expertise and insights to illustrate the caveats of not being adequately informed and prepared. Let me know if you would like an introduction anytime to a partner in your area.
Until the next time...