Key Factors for a Business Succession Strategy

A good business transition plan is essential to achieving your goals down the road.

Whether you want to keep the business in the family or sell to outside buyers, the journey is long and rewarding. Here are some important things to think about.

Strategic considerations
  1. Timing: A plan should start taking shape years before your departure or change in role, and involves building a transition team. With your eye on maintaining company strength, a good plan will help guide ongoing operations: hiring, employee retention, and more.
  2. Personal goals: You've worked hard for a payoff that will allow you to finance your next venture, whether it's a new business, charitable foundation, or other goal.
  3. Family financial security: Some family members may be critical to succession; others will not be involved. Achieving fairness for everyone can be complex. Transition can be controversial, but there are ways to help improve communication and minimize disagreements and power struggles.
  4. Risk management: Even for companies with substantial assets and loyal customers, lack of liquidity can impair the transition process. A good transition plan accounts for this, allowing wealth extraction while keeping the company vital in a competitive market.
A fork in the road

A critical transition issue: keep the business or sell? Here are some factors to keep in mind.

Keep the business in the family

The hand-off process can be complex
According to a study by The Williams Group, many affluent families lose wealth by the second generation, but a solid transition plan can reduce that risk. This may include mutually beneficial, tax-efficient strategies for selling or gifting the business to heirs.

The big question: who gets the job?
A critical component of a successful transition is getting successors in place. If several family members are involved, sorting out the reporting structure can be nuanced. Effective communication during the planning process will help clarify expectations and responsibilities.

Sell to outside buyers

Sorting your options takes time
You’ll have many options, including an Employee Stock Ownership Plan (ESOP), an outside sale, or an IPO. A succession plan considers the needs of the business, the dynamics of the market, and your personal goals.

Prepping for sale has many dimensions
Proper valuation of your company is a vital planning tool, and a transition team will help make an objective assessment. As transition approaches, the successor must be groomed and your role clarified. During this period, talent retention becomes critical.


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Inter-generational Wealth Transfer Woes. A study by The Williams Group. (June 8, 2017).

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