The Purpose of Succession Planning

To design and put in place a plan that enables business owners to:

1. Exit or transfer their business ownership interest when the time comes, within the framework and on the basis of an agreed strategy.
2. Clarify and analyse their exit options evaluating the feasibility and desirability of each, and consider the impact upon family members.
3. Make sure the business is preserved for the next generation, passed harmoniously to the remaining owners, purchased by employees or sold to a third party in accordance with the owners’ wishes.
4. Enable retiring owners to move smoothly into retirement or out of their current responsibilities with the funds they will need to maintain their chosen lifestyle.
5. Provide the cash needed to help the family, the business owners, and the business itself to overcome obstacles that may be encountered along the way such as the sickness, disability or premature death of an owner, co owner or key employee.

Seven Step Process

Your adviser will gather relevant information about the ownership and management structures of your business and prepare a comprehensive written report, outlining recommendations to achieve your desired outcomes. Your SuccessionPlan™ will:

1. Clearly outline your exit objectives and develop a plan to allow “key” people to make a smooth exit with minimal disruption when the time comes.
2. Estimate the current value of your business and propose a formula for valuing it in future.
3. Suggest ways to improve profits and make your business more attractive to potential owners.
4. Explore options available to ultimately convert the value of the business to cash by sale to a 3^rd party; or transfer to co-owners, employees or family as may be appropriate.
5. Propose a contingency strategy to as far as possible guarantee business continuity and solvency following the death or incapacity of any individual/s identified by the Client as a “key person.”
6. Estimate owner/s financial position after sale or withdrawal from the business and during retirement.
7. Develop an estate plan to make sure family income needs are met and non-business assets pass to the proper family members if a “key person” dies or becomes disabled.

Frequently Asked Questions

How long does it take to complete a Succession Plan™?

Conventional succession planning is a process that can involve many individuals representing several generations, professional advisers, and the careful consideration of planning alternatives.  Some specialists say completing a comprehensive assignment can take six months or more.

By contrast, the SuccessionPlan™ system uses modern technology to minimize your time (and cost) but still deliver a comprehensive plan that covers all the essentials, clarifies your options and evaluates the feasibility of various course of action – in only a few weeks. All we ask is that you:

1. Complete a  preliminary fact finding questionnaire.
2. Provide, make available, or authorize your professional advisers to supply all relevant information necessary to complete the Plan.
3. Schedule a further 2 hours to  review your completed Plan.

Your completed SuccessionPlan™ could make various recommendations, which you will then be free to:

• Implement yourself.
• Take advantage of additional services available from us.
• Involve other professionals (eg accountant, lawyer) as you consider appropriate.

After your plan is completed we will be available to monitor your progress and to deal with issues or answer questions at any time.

How much does it cost to create a Succession Plan™?

Conventional succession planners target high net worth private and family businesses.  The following quoted from an American firm gives an indication of their fee structure;

“If the cost of succession planning is measured in terms of the fee paid to family business specialists, attorneys and other fee-for-service providers, it will likely total one to four man-months of time, multiplied by whatever hourly or daily rate is applicable.”

Perhaps this fee structure partly explains why so many small to medium enterprises do not have a written business ownership succession plan or exit strategy.

By contrast, our mission is to deliver professional succession planning at a price any business can afford.

Our SuccessionPlan™ was independently valued at about $10,000 based on prevailing professional hourly rates. A small investment compared to the capital at risk and the financial consequences of a forced sale or liquidation. But the news gets better. You will be plesantly surprised at low fee scale, which can be as little as  only $3,900 depending on business size and the number of owners or entiries involved.

If the SuccessionPlan™ fee is offset by the enhanced family cash flow and the preservation of wealth that result from the plan, there is usually a big saving.

What are the benefits of Succession Plan™?

• SuccessionPlan™ works. On the other hand, “failing to plan is planning to fail.”

• An obvious benefit is the preservation of wealth and assurance that family resources will go to the parties of the owner’s choice.

• Another important benefit is securing the owner’s financial future.

• Often the most important benefit is the opportunity for co-owners and family members to share, communicate, and work together to complete a project of great importance.

• Succession planning brings families and co-owners together as much as not planning drives them apart.

• The planning process allows both the senior and the next generation to get on with their own lives, free from uncertainty over the intentions of other family members or shareholders.

When should a Succession Plan™ be done?

It is never too early to begin succession planning, but the process becomes critical when:

• The business is highly dependent upon the skills of one or more key individuals.

• There is more than one owner of similar ages or there are significant age differences.

• The business matures to the point where it can survive without the owner.

• The owner’s children join the business.  While it may not be clear whether that involvement is a career commitment, employment in the business invites the question, “is the next generation destined to eventually succeed the existing owner?”

• Retirement or disability is a serious consideration. For some owners, this occurs when they reach age 60 or 65, while the physical and emotional makeup of others dictates a very different answer. Regardless, there comes a time when circumstances, age and physical considerations require consideration of a succession plan.

How do owners know if they have enough resources to secure their financial well being for the rest of their lives?

When owners retire or become less active in the business, they change their activities but generally not their lifestyle. Consequently, in their later years, they need proportionately what they are used to, supplemented with special requirements such as a holiday home and cushioned by a healthy reserve for unforeseen circumstances. The size of the retirement reserve is subject to individual judgment. Our role is to help you determine what level of income is appropriate and to plan well so adequate resources will be there to provide it.