Business Succession Planning: The Team Approach
This article is one of a series of articles on business succession planning and related subjects. It is meant to guide business owners through the process of maximizing their personal financial security upon the transfer of business ownership.
By Joe A Salib, CFP
If you anticipate that your business will have a market value beyond your personal skills and goodwill when you retire, professional advice can be invaluable, even essential.
The team of professionals you choose to help plan your business succession will depend upon the size and complexity of your business and your personal circumstances. This team can include family members, members of the business management and outside advisors.
Pulling the team together
If you are relying on different professionals to help you with the business succession planning, you will need someone with a “big picture” perspective. Your accountant or your financial advisor (typically an insurance professional with financial planning experience) could assist you to put the team together. For more complex situations, you could hire a firm specialized in providing complete management services.
The generalists
Board of directors
A Board of directors can be a great asset for a business and should include qualified non-family members. From a succession planning standpoint, they can offer an objective advice. They can help you assess the relative skills of potential successors – including family members you‘re considering as successors in the business.
Family council
Some families establish a family council to discuss the role of the business within a family context. Family members can help establish business and succession goals based on the wishes of family members.
The specialists
Tax specialist
A tax specialist has the expertise needed to minimize capital gains and other taxes for the current owner and other family members.
Legal advisor
A legal advisor can help set a course of action and help with advice on legal issues as they arise. Once a strategy is determined, the legal advisor can play a key role in the implementation such as drafting required documents and agreements, create trust and restructure the corporate capital.
Financial advisor
Your financial advisor may provide board financial planning or specialize in insurance. Life insurance can help ensure that funds are available to carry out a succession plan or an estate plan. Consider a financial planner who has his/her CFP designation or an insurance specialist with his/her CLU designation.
Bank manager
The bank manager will be concerned with the impact of the succession on business debt and would play a role in the financing of elements of the succession plan if required.
Trust officer
Succession and financial planning can involve the use of trusts. Where a family trust or other trusts exist, the trustees should generally be involved in the discussion.
Family business advisor
In larger more complex cases, a family advisor can help facilitating and mediating complicated family business situations. They can help the business succession planning team reach an appropriate and acceptable course of action.
While it is possible to structure your own business succession plan, professional advice can be invaluable to safeguard the value of your business, help you with the best possible exit strategy for your retirement and ensure a successful transition.
Our next article – The business and Family Succession
Joe A. Salib, is a Certified Financial Planner active in investments and insurance strategies for individuals, business owners and professionals. He can be reached at 416-912-1818, email: joe.salib@sunlife.com
2600 John Street, Unit 207, Markham, ON L3R 3W3 T: 905.475.5222 F: 905.475.6369
