The Merits Of Succession Planning

Exit options are always a hot topic amongst business owners and one that can cause considerable stress

. Succession Planning can take the stress and worry out of selling your business and pave the way for a smoother sale and handover.

The key to a successful exit is selecting the correct strategy for your particular situation. There are several different exit strategies to consider and one size does not fit all.

The main thrust of succession planning deals with the transfer of wealth and management of a business. If the company is sold as a whole, wealth and management are transferred simultaneously, but if not there are two types of succession that can occur - Ownership Succession and Management Succession. Both elements can have their own set of complications but with succession planning these impediments can be avoided.

Ownership succession, as the name suggests, involves the ownership of a company. Succession planning becomes invaluable in organising who will own the the enterprise and when a transfer of ownership is to occur. There are times when an owner does not want to sell but rather just relegate the day-to-day running or management of it. This situation can be achieved in the most desirable manner with a strategic succession plan.

Management succession works hand in hand with succession planning. Often, upon the sale of a business, the owner will stay on to manage the company for a specific length of time; this has its merits as it can help maintain brand value and customer loyalty, but comes with its own set of rules that need to be covered and planned for.

A business is often one of the most valuable assets you have and often the means of funding a retirement, so when it is time to sell it is vital that the right strategy is employed in order to achieve the best possible monetary value.

by: Iman Bahrani

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