Developing a watertight business succession plan
Published 25 Jul 2019
You never know what the future holds. As a company owner, this means it's important you have a watertight business succession plan in place, in case you're suddenly unable to continue running your business. Setting out your wishes and intentions for your business clearly is key, but not always easy.
How to create a business succession plan that works
The aim of your business succession plan is to ensure a smooth transition no matter the circumstances. If you're no longer able to run your business due to ill-health, you may not be able to direct the transition. As such, you might consider developing a timeline of what needs to be done immediately in order to carry on operating, versus what can be dealt with over time.
Even if your intention is that your family or partners sell your share of the business, a succession plan is crucial in ensuring they obtain the full value of your company.
The first few days after a sudden illness or death are going to be difficult for all involved. The last thing friends and family need is constant calls from clients or contractors who still need answers or who haven't heard about the changes.
Set out clearly any essential actions, such as communicating more widely, changing bank account details or insurance information. Include all relevant details so each step is easy to follow, and make suggestions about who is best placed to manage these tasks.
Changes over time
Your colleagues or family may need to set about creating a new board or directors, and reallocating your day-to-day responsibilities on a long-term basis. A succession plan is your opportunity to say who you want running your organisation, how you want the business to grow and what your underlying goals and objectives are.
Should you want your family to sell the business, or allow for a partner to buy out your share, you can also make this clear. Stipulating your long-term plans also provides an opportunity for your to revisit any other crucial business agreements. It's crucial that any important documents are attached to your succession plan. Include copies of your will and testaments, insurance papers, lease papers and any other legal documentation so there are no disagreements about who is entitled to what.
At Malouf Solicitors, we're on hand to help you design a business succession plan that's both legally watertight and covers all eventualities. Get in touch today to talk to one of our business succession experts.
Please call us on 02 8833 2000 to speak with a lawyer
Dear Anthony & Kym. Thank you for all your help and support in our matter. It is a big relief to us that it is over. Please also thank your staff, Myla and Lina etc for all their help. It has been a pleasure working with you all, the subject matter notwithstanding. With best wishes and regards,
Nick of Parramatta