Client Alert

Tips for a successful succession plan for your family business

Using a few strategies, you can have a smooth and conflict-free succession process:

Choose an heir

Ideally, you should start at least a decade before leaving — think about who you would like to take over. The next person to run your company will likely be within your company so start scouting out the real star employees of your ranks. Otherwise, you may look outside the business.

Create a training scheme

Get your next top leader working in the parts of the company they are going to be concerned with in future. It is important to have hands-on knowledge as well as the theory in mind when taking the reins.

Finish your financial business interests

You may sell your business interest before you retire, on your last day, or long after. As an appreciating investment, capital gains tax will apply to these profits – a financial adviser could assist you in the timing of this important decision. Alternatively, your business interest could be transferred through legal contracts, trusts, Private Annuities, Self-Canceling Installment Notes, or Family Limited Partnership.

Set a timeline

Then, when the moment arrives — how might the company be handed over? When will the ceremony occur? These and many other questions need to be answered and schedules set out.

End your career thoughtfully

There are countless ways to prepare for retirement – financially (401k and taxes), psychologically and physically. With more certain retirement goals in mind, your departure from work will not seem as jarring.

With the many options available to an entrepreneur upon their leaving their business, it can pay to get good advice on the financial, legal and emotional impacts on your future.

Posted in Client Alert, Succession.