Succession planning

Protect and transfer your net worth by selecting and preparing a capable successor.

Many business owners neglect succession planning or don’t keep it current: understandably, they’re focused on running their company and making a profit. Yet, if they don’t address the issue, their company can fall apart when the time comes for them to move on.

Done properly, succession planning will enable you to:

  • plan for an orderly transition of your business
  • identify and prepare a capable successor
  • build, protect and transfer your net worth.

How can TCii help with succession planning?

TCii has devised and perfected a succession planning process that helps business owners accomplish all the goals listed above. We have used it successfully with a wide variety of privately owned businesses. The basic steps are outlined below. Email us or call us on 020 7099 2621 for more detailed information.

The guidance on this page assumes you wish to retain ownership or transfer the business when you exit. If you are thinking of selling your company outright, see our section on exit strategy and implementation.

Basic steps in succession planning

Succession planning answers the question: “If I die, become disabled or otherwise leave the business, who will run the company and what will happen to it?” To answer this question you need to take three basic steps:

  • Identify the successors. Your choice should be based on two critical criteria: who you want the business to go to, and who is best qualified to run it after you leave. Often, these two are not the same. As a result, identifying a successor can be the most difficult step in the entire process. Your options will probably be:
    • family member(s)
    • partners and/or shareholders
    • professional managers or key employees
    • some combination of the above.
  • Plan for every contingency. You need to plan for any and all events – such as retirement, death or disability – that can trigger the succession plan. The appropriate successor might be different in each case.
  • Memorialise the plan. Put everything in writing and create the necessary legal documents – for example, buy/sell agreements, partner agreements and living wills. These documents should also specify where the money will come from to facilitate the transition of the business.

Succession planning issues are complex, so we recommend that you get expert help from lawyers, tax planners and estate planners.

Succession planning for catastrophe

To cover the possibility of your untimely death or disability, your succession plan should:

  • include an up-to-date financial statement
  • clearly state what happens with key employees, who is in charge, and what roles they play
  • name a board of advisors composed of independent, skilled and trusted business people to help your surviving spouse through the crisis.

Succession planning to protect your assets

The secret of successful asset protection is to delegate wisely and well.

  • Create a team of high calibre business transfer and estate planning specialists, including:
    • an accountant with estate planning expertise
    • an estate tax lawyer
    • a business valuation specialist
    • a life insurance specialist
    • a financial planner/money manager.
  • Appoint a team champion who understands all aspects of your succession/estate plan and can communicate your goals to the other specialists on the team.
  • Clarify expectations for your team champion. Their tasks can include reviewing your buy/sell agreement, evaluating existing trusts, making sure you have the appropriate amount of life insurance, exploring a family limited partnership, and much more. The key is to:
    • make sure your champion knows all your goals so that they can fit all the pieces of the puzzle together
    • give your champion plenty of licence to badger you in order to get what they need to do the job properly.

Once your plan is in place, your champion will ensure that it stays current – for instance, by monitoring changes in the Government’s tax policies.

Next steps to a safe, comprehensive succession plan

To discuss the succession planning issues affecting your business, email us or call us on 020 7099 2621.