Business Succession Planning from the Perspective of a Commercial Lawyer
A Commercial Lawyer sees all sorts of businesses and deal with the effects of human nature in business on a daily basis. They document business ventures, estate and succession plans and we are often brought in to clean up the mess when things don’t go smoothly.
Planned Succession
Planning assumes there is time to plan. Often the business is closely tied to the founder who has a significant bank of knowledge which should be documented and communicated during the planning and handover process.
There are many issues to consider when preparing a succession plan:
– Will the owner leave completely or will the owner have some future involvement with the business?
– Who is to be the successor? This doesn’t matter if the business is being sold at arm’s length
– How will the owner conduct discussions with the preferred successor? Is there a backup successor?
– Will the owner appoint an independent person to lead the discussions and to chair meetings?
– Owners should set a realistic timeframe for planning, documenting, mentoring, transition, handover
– What are the risks to the business that may arise?
– How will the organisation structure change and how will other people’s jobs change as a result?
– What training is required for the successor and other people in the organisation
– What documents should be drawn up?
– What advisors will be involved – accountants, lawyers, spouse? [...]
