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Three tips for a successful business succession plan

When done wisely, transitioning a business into new ownership can prove a profitable affair for both the current and future business owners. Three tips that can help better ensure everyone benefits from the transaction include:

  • Think ahead. A smooth transition requires proper planning. Ideally, begin putting together the plan years ahead of an anticipated transition. This is helpful for a number of reasons. In some situations, it works well to have owners or key members of management remain within the organization for a period of time to help ease the transition of the business. If your role qualifies it may take longer to transition out of ownership than anticipated. Beginning the plan earlier than needed can help to avoid any obstacles with your transition out of ownership and help you structure a realistic timeline for the deal. 
  • Get a valuation. A professional valuation of the worth of the business is beneficial whether selling to a third party or transitioning a business within the family. If selling to a third party, the valuation can provide grounds for negotiations. If transferring within the family, it can provide a better awareness of the business’ status within the marketplace.
  • Gather a team. Accountants and attorneys can provide invaluable assistance when structuring these deals. Accountants can assist with proper valuations while attorneys can help account for legal matters. An attorney experienced in business succession planning can help to ensure that any potential legal issues are addressed prior to the transaction. This can include issues that could arise with lenders, environmental regulations and numerous other concerns.

When these tips are applied wisely, you can build a strong succession plan to help better ensure a smooth transaction and a business that survives the transition period. 

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