The process involves the transfer of managerial control, assets, ownership and an occupation. Successors must be selected and groomed. The timing of the transition and managing the entry and exit of family members is one part of the process. Estate planning and the preservation of the family wealth and business continuity is the second vital part of the succession process.
Therefore we can understand that the process goes beyond drafting wills, buy sell agreements, commissioning valuations and purchasing insurance. Communication is what underpins any successful succession plan. Even the biggest and best businesses need outsiders to come and work with them on this to ensure their succession is as water tight as it can be.
If you are the current owners and/or parents in a family enterprise, succession planning is really important. Even though the process is not always easy it is worth the effort. Leaving it to your kids to “fight it out” after you are gone is not the answer in my view.
It is as much about organizing and planning your own future as it is about providing some certainty and a future for your kids. This is a challenge but also an opportunity that needs to be grasped with both hands. Putting it off usually doesn’t resolve anything, but can add to intergenerational frustrations and a breakdown in relationships.
What are the steps?
Part A is the Succession Plan
This is delivered in stages in a time frame that suits you. Below is a brief outline of the stages of the program:
Stage 1 Introduction:
We will meet with the business owners to assess, identify, understand and document the key issues facing you and your business in the future.
We would then hold a similar meeting with your proposed successor/s and have discussions with other family members if wanted or needed.
Stage 2 Assessment:
OBT will compare the goals, agreements, issues and needs that have emerged from the first stage at a joint meeting of all the involved parties.
Stage 3 Alignment:
The facilitation of negotiations between the parties as required to lead to a draft succession plan for the family, including proposed changes to ownership and management of the business, proposed job descriptions / roles for each party and proposed timeframe. This stage will include liaising with your taxation, legal & financial advisers as required.
Stage 4 Finalisation:
Document the final succession plan after all interested parties are in agreement.
Part B is the Implementation Stage
After completing the Succession Plan, we will be available to assist you with its successful implementation. The actual steps involved in this Implementation Stage will be determined following completion of stage 4 and will be subject to a separate proposal and engagement.
Importantly, this Implementation Stage is not part of this Succession Plan proposal and will be an extra cost to be determined at the time. Such costs might include not only OBT’s input, but also legal fees, stamp duty, new trading entity establishment costs, preparation of cash flow budgets, finance / borrowing costs etc.