For most business owners, the idea of when to pass it on or sell up is an issue most tend to avoid.
Unfortunately, often an event such as a death, divorce or accident forces the issue and mostly the best result isn’t achieved.
By proactively planning for the future handover of your business and assets, contemplating the future needs of stakeholders, borrowings, and the appropriate entities, you will be prepared for the unexpected when it happens, and provide certainty for the future generation wanting to take up the family business.
Carrick Aland understands the difficulty in getting the conversation started. To this end, our brochure explains the process and what’s involved. (Click on the link at the end of this article to read or download a free copy.)
Succession Planning is a process where we step through the issues with yourselves and other relevant Professionals (e.g. Solicitor) to formulate a future plan.
We understand that everyone has their own individual set of circumstances, their own business such as a farm or retail shop, so the process is tailored. The process is broken down into areas which we will now explain.
1. What are the Variables
Initially we are looking at all the facts and variables that need to be considered. We look at what all the assets and liabilities are, who owns them. We look at who the family group is and how wide the succession plan is to go. We consider the current trading entities. In essence we are looking at doing a fact find to ensure we know all the ‘ingredients’ that need to be considered in the plan.
2. What are the Wants
This is often the most difficult stage. We would look at having family and individual meetings with stakeholders to see what they really and honestly want in the future. There are often surprises, but ultimately once we know the wants, we can see what is possible.
3. What are the Possibilities
Having established what people want, we then start the plan of what is possible. What if scenarios, combined with financial projections and modelling will assist in seeing what can be achieved. This may mean the plan to expand a business, so it can be split later for more than one successor, or even to make the existing business bigger to support two or more family members. We consider who the buyers might be and what can be afforded. We consider how to accumulate wealth for stakeholders who do not wish to be involved in the business but can be provided for later.
It is ultimately a process of seeing what can be realistically done and looking at timelines for it to be achieved.
4. What is the Plan
Having looked at possibilities we now look at making firm decisions that the stakeholders agree upon. We look at the timelines and things that need to be put in place as many things may require 5+ years to be achieved. We also look at contingencies for unexpected events that may affect the plans, such as death or injury. Knowledge and skill gaps are identified so that upskilling can be planned for successful future management of the business. Financial projections and budgeting are set to monitor the plan.
At the end of this stage, all stakeholders will have an agreed upon future plan.
5. Execute the Plan
This is where the ‘rubber’ hits the road. At this point the stakeholders commit to what they are wanting to achieve. In the ensuing years, as the plan takes the form of reality, the stakeholders need to constantly review their situation and review their plan – sometimes things don’t go according to plan. Constant review of its objectives will allow for adjustments along the way.
