What Is Succession Planning?
Succession planning is the process of identifying a strategy that allows the current business owner to transition out of day-to-day management of their business and into transition to retirement.
Part of succession planning includes the consideration of eventual selling of the business to a new management team.
Is Success Planning Important for Current Business Owners?
Absolutely. Consider the case of a family-owned business. For many family-owned businesses, the business is the single largest asset they own. This asset represents how they will fund retirement.
Therefore, ensuring that full value that the business represents is captured is absolutely essential for a successful retirement.
Succession planning should be something that is considered years before the business is actually sold. Some of the points that need to be considered:
Who will take over the running of the day-to-day business?
Does the new team have what it will take to run the business?
How will the eventual sale of the business take place?
Should you sell some or all of your business assets?
Are there tax strategies that can be utilized to ensure that you retain as much of the sale price as possible?
What are some of the other factors that need to be considered such as when will this take place?
How can the KMA team help?
The Process
We start by having discussions with our clients over how they plan to eventually step away from their business. This is not something that should wait until health or interest prevents you from working. It is a process that should be started years before.
Next we go over the steps of transition, the options and points for every business owner to consider. We will help you develop a tax strategy, and if needed how to reorganize your corporate holdings to ensure that transition is done is the most tax efficient strategy.
We discuss the options of how to sell your business, be all or some of it. For example, if you don’t need all of the proceeds right away, there can be advantages to receiving payment over time.
Succession planning is a process that takes time and effort. We recognize that every business owner is busy and it is easy to put aside these important questions. At KMA, we are here to help you.