Elements of a Succession Plan

Your crucial steps to a smooth transiti

Succession planning does not take place in isolation from the larger issue of your overall financial security. An effective succession plan will examine all aspects of your financial situation.

Distribution of Ownership

If you are transferring ownership of your business, a shareholder agreement is a key tool that should be considered.

A shareholder agreement is an agreement that governs the conduct of the shareholders and determines ownership rules.

More details, Distribution of Ownership
Selecting and Grooming Your Successo

Identifying the right person to take over the reins when you leave is a process that requires careful thought and planning.

When selecting a successor, you'll need to:

  • Establish measurable criteria for assessing potential successors
  • Identify suitable candidates
  • Identify gaps in their skills and experience
More details, Selecting and Grooming Your Successo
Business Maximization Strategies

There are many strategies you should consider to increase the value of your business prior to sale or transfer of ownership.

Potential Business Maximization Strategies include:

  • Focus on business growth and profitability
  • Diversification of customer and supplier base
  • Reduction of operating costs
  • Evaluation of discretionary expenses
More details, Business Maximization Strategies
The Role of Key Employees

Key employees are vital to the success of ownership transition, and can offer real help in the planning process.

Key employees are vital to the success of ownership transition, as they provide continuity in the day-to-day operations of the business.

More details, The Role of Key Employees
Business Valuation

While you may have a good idea of what your business is worth, you should still consult with a professional business valuator to confirm or determine this crucial figure.

Valuators use a variety of methods to establish value and will consider factors such as:

  • Nature and history of the business
  • Outlook for the business and the industry in which it operates
More details, Business Valuation
Financing and the Mechanics of Sale

Financing the change of ownership should be a key part of your succession plan.

Among the elements you need to determine are:

  • What is being sold – assets of the business or shares (which include the ongoing rights and obligations of the business)
  • Purchase price – may be affected by the payment structure and type you negotiate
More details, Financing and the Mechanics of Sale
Taxation and Legal Considerations

It is important that you consult with your tax and legal advisors early in the process to make sure that that your plan achieves your objectives.

While there are common methods for dealing with these considerations, each situation is unique and your tax specialist and lawyer can advise you in the context of your own particular circumstances.

More details, Taxation and Legal Considerations
Retirement and Estate Considerations

Since your investment in your business is probably your most significant asset, there are a number of important retirement and estate planning issues that should be addressed.

These issues include:


When you develop your plan, you should ensure that there is a clear timetable, so those involved know exactly what will be expected of them and when.

Dates that must absolutely be planned for include:

  • Retirement of the business owner
  • Transfer of share ownership
  • Transfer of voting control
More details, Timetable
Monitoring Process

Be sure to update and adjust your plan as necessary if and when there are changes to your business and/or personal situation.

It is also important to communicate your plan with key stakeholders and keep them informed of progress and any changes along the way.

More details, Monitoring Process
Contingency Planning

If illness or death meant that you were suddenly unavailable to manage the business, who would take over your responsibilities?

Consider the following when creating your insurance plan:

  • Key person protection
  • Buy-out funding
  • Funding of capital gains tax
  • Estate equalization
More details, Contingency Planning

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