Ensuring business continuity on owner exit
Importance of ownership and management succession
Considerations around succession – both ownership and management – is a critical component of forward business planning for all business owners. Owners need to apply the same effort to their exit as to their entry to protect the business they have strived so hard to build and the employees who will continue to work for the organisation.
Ownership and management succession can take many forms, dependent on the organisation, potential sale, opportunities for a management buyout, and implications for personal tax minimisation with its ongoing consequences for long term wealth and estate planning. Tribel Accountants can work with you to review and evaluate all the alternatives available to you.
Having an exit plan
As a business owner, do you know where you want to be in 5 years? Do you still want to be running your business? Do you know how much it can be valued? What legacy can you leave?
Succession decisions are essential to ensure a smooth exit for the owners and continuity and surety for new management and employees. Taking these decisions now is critical to ensuring the legal implications and arrangements are confirmed. Owners who don’t plan or don’t have the succession plan in place run the risk of potential issues.
Without precise succession planning:
Disgruntled workforce
Without a smooth ownership and management transition, key employees may move on
Management conflict
Unclear lines of succession as agreed by contract can create unnecessary tension and issues within management
Family conflict
Where succession is not agreed by contract but involves family, issues of equity and stability may arise
Legal issues and implications
Succession plans agreed through contract outline clear lines and processes for transition and are not open to challenge
Tax implications
It’s critical to take expert advice in advance to help minimise any potential personal tax burden
Inheritance impacts
Ensuring the most for those you may leave behind through considered estate planning
Benefits of ownership and management succession
It’s a wise business practice to leave an organisation in a more efficient and streamlined way. Appropriate management or ownership succession plan can help plan for the intricacies and potential pitfalls. Often intertwined, these can also be separate, discrete activities with their own legal and process implications. Ownership succession refers to the transition from current to new purchasers, and management succession refers to when that owner exists the management and leadership structure.
Ownership succession
Specific to the owner or owners of a business, transition from current to new ownership
Benefits include:
- Planned change out of a business
- Buy/sell arrangements where multiple owners are involved
- Planning towards expected sale value
- Clear communication with stakeholders
- The setting of expectations in advance
- Clear legal obligations and requirements
Management succession
Specific to running the business, transition from current to new management and leadership
Benefits include:
- Creating efficiencies in advance of the transition
- Buy-in from employees and stakeholders
- Supported transition to new management vision
- Future-proofing an organisation to set up future success
- Ease of transition from one leadership team and style to the next
- Overall stability and continuity for the business
How Tribel Accountants can help
Contact us today to arrange a complimentary obligation free consultation to take the first step towards achieving your business goals.