Strategic Planning

Business Succession Planning

A Business Succession Plan is a financial and tax plan that is effectively a 'Will for your Business'. The plan provides 'Certainty' and involves planning for the smooth continuation and success of your business.

A properly developed and documented Business Succession Plan can help :

  • Give your business every chance of survival when you are gone or suffer a long term illness or accident.
  • Ensure your family and yourself receive the true value of your interest in the business.
  • Allow for an orderly transition of ownership to the remaining partners, family members, or key employees - rather than suffer a fire sale.
  • Provide a ready market for your business interests.
  • Retain key employees

Some Statistics :

Less than 30% of business owners aged 51 to 60 have a written Business Succession Plan, and more than 70% have no plan at all. For owners over the age of 60, half do not have a written plan for the orderly, or disorderly transfer of their business interests. Only a third of family businesses continue into the second generation, and less than a sixth (that is 16%) survive to the third generation.

You can ignore the opportunity to plan your own succession. (After all, perhaps you will never die, get sick or suffer an accident!!) The result of your failure to plan? You are leaving your business susceptible to self-destruction. This is known as 'business euthanasia'.

A Business Succession Plan considers the best way to :

  • Structure your affairs to reduce unnecessary Capital Gains Tax, Income Tax and Stamp Duty for you, your family and your remaining partners
  • Fund the transfer of your interest in the business to your outgoing partner
  • Trigger the events to allow the succession to take place, for example your business partner gets a nasty and undignified divorce, goes broke, dies, goes to jail, becomes of unsound mine, suffers a total and permanent disability as the result of an accident, suffers a trauma event, like a heart attack, stroke or cancer and can't get back to meaningful work, or simply wants to retire.

Some of the issues we discuss to develop the plan include :

  • Who will own and run your business after you are gone? (Remaining partners, family members, key employees, a competitor, or an investor).
  • What do you wish to accomplish in the Business Succession Plan? (To perpetuate the business, transfer the business to the remaining partners, or have a family member take control).
  • What is the business worth now? What is the business worth without me?
  • How is the business valued? (Agree on the value now and index it for inflation, a formula, or some other basis)
  • When and how might you want to move out of the business? (At a particular age, over a period of time, or at a given profit level).
  • At what age do you wish to retire?

Strategic Planning Solutions ABN 60 097 554 099 is a Corporate Authorised Representative of Matrix Planning Solutions ABN 45 087 470 200, AFSL & ACL No. 238256