Succession Planning for Business Owners
Effective succession planning is often overlooked by business owners until they want to retire or, just dispose of the business.
Much like making a Will, planning for the future of your business is often left too late which makes your exit from the company harder to achieve or less financially beneficial than it should be.
It’s never too early to start thinking about your exit strategy and our corporate law solicitors are here to help you plan for your future before it is too late to maximise the benefits available.
Every Business Plan should include your exit strategy and a Management Succession Plan which should be reviewed regularly to make sure that it takes account of changes in your business.
At the outset you and your business partners will have had shared goals and objectives but, as the business evolved, issues and conflicts may have arisen. These need to be resolved whether or not you are planning an exit.
You need to consider how your business is structured as well as who owns what and what type of shares have been issued. Any agreements which regulate the positions of the business owners in dispute must also be looked at.
These are all matters that need to be looked at when a dispute arises and cannot be resolved.
Ideally, you should consider mediation or a business coach to help you diffuse the situation, but if you have tried everything and remain unable to resolve the conflict then one, or all, of you may need or, want to exit the business.
This process is much like divorce and can be as messy as a divorce if you haven’t planned your exit strategy.
Shareholder Agreements – Partnership Agreements
Partners may not always agree or may develop competing priorities for themselves or, the business.
You should, therefore, have a documented process for dealing with such situations and the fallout from them.
Your Shareholder Agreements or Partnership Agreement should provide for how these situations are to be resolved. Whatever your business structure make sure that, at least, you have a clear and agreed written process setting out how you will resolve disputes, and exit or dissolve the business.
Illness or Disability
Health issues are always a consideration and if your health becomes a factor then you need to find a way to exit or, at least take a break from work.
Have you got an Insurance Policy covering illness or disability that might require you to be absent from your business temporarily or permanently?
You should consider potential successors who will be able to step into your shoes should you suddenly need to take leave of the business.
Death is something that comes to us all, and none of us know when or how it will happen.
What would happen to your business if you were to die suddenly?
Part of the plan must be to have in place a life insurance policy made out to the business especially if it is to continue without you and a ‘keyman’ Insurance Policy is also worth arranging.
The definition of key personnel is an individual(s) whose injury or death would have a significant impact on the running of the business.
You could also consider selling your business and our commercial law team can assist you with that.
Our team of talented corporate and commercial solicitors in Liverpool and Southport can help you plan for your life after business. To make a start contact us now.