Succession Planning: Planning Today for Tomorrow July 28, 2017

Succession planning is often discussed but, as the cliché goes, actions speak louder than words.  For business owners who spend their every waking hour growing their companies, succession planning often gets put on the backburner to the everyday demands of a successful company.  However, taking the necessary steps to secure your company’s future is the best way to protect yourself, your family and your employees.

Sticking with clichés, succession planning is a bit like the old saying “How do you eat an elephant?  One bite at a time.”  While the end product will likely be complex, it all begins with the first step.  One way to do this is with a two-pronged approach:  (1) review the basic estate plan, which should include wills, trusts, financial powers of attorney, living wills, and healthcare powers of attorney, and (2) start the conversation with the business owner and his or her core group of advisors.  The core group of advisors may consist of the lawyer, the accountant, the financial advisor, the insurance broker, possibly an investment banker and potentially certain key employees.  The earlier these conversations begin the better.  The expertise and experience each advisor brings to the table offers you a variety of perspectives, which ultimately allow you to craft the best possible succession plan for your unique needs and desires.

The options for succession planning are vast and highly customizable, but it takes a significant amount of time and effort to fully develop the end-product. Even the best laid schemes of mice and men often go awry; besides death and taxes, nothing is certain.   Circumstances change – health issues arise, business opportunities are presented, the global economy crashes.  It is best to have the time to weather whatever storm you may face.  One of the worst case scenarios is being forced to sell or liquidate during an economic downturn due to lack of proper planning.  And if the succession plan needs life insurance to fund a buy-sell agreement, you do not want to unreasonably delay the process and thereby risk the business owner becoming uninsurable.

Succession planning involves asking and answering difficult questions.  When is the right time to walk away?  How much money is enough?  Are the intended successors ready to lead?  And ultimately, what is the legacy you want to leave behind?  These questions take time to answer, and the answers may change along the way, but advisors are there to help business owners wrestle with these difficult questions. With the right team in place, succession planning does not have to wait until tomorrow.

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