The planning process

Business succession & sale

May 4, 2017

This is the first of a two-part analysis – based on insight drawn from the research files of Scotia Wealth Management – about the complexities of business succession and sale, an all-too-frequently overlooked issue for the small business entrepreneur.

A business often represents a lifetime of work. Despite almost three-quarters of business owners wanting to transfer control or exit ownership within the next decade, barely a third has a formal succession plan in place. Lack of a plan is a common reason family businesses fail to survive first-to second generation ownership.

Leaving business succession to chance could allow someone else to decide what happens to your business, potentially at significant cost. Planning early may help ensure a smooth and successful transition of the business to the new owner or owners, as well as reduce the tax impact of ownership changes. A successful plan may also help enhance the overall value of your business today.

The succession & sale planning process

The process of planning and enacting a successful transition consists of several steps, each of which is equally important. These steps include:

  1. Identify and review priorities
    The first step of the process starts with identifying your priorities. Business owners should ask themselves, “What do I want for my future, my family, and my business?”
  2. Identify a buyer or successor
    Who will run the business when you are no longer doing so?
  3. Develop a succession plan
    Since a variety of expertise is needed, it is important that you work with an appropriate team of experts to help you develop your business succession plan. Such experts typically include a wealth advisor, an accountant and a lawyer.
  4. Integrate the plan with personal financial planning
    Ensure that your personal retirement and estate goals are integrated with your overall financial plan.
  5. Monitor plan implementation
    It is important to monitor and review your plan during the implementation period to ensure that you are on track in terms of timing and deliverables.

A significant asset in your estate

According to U.S. based business succession experts Baldwin, Haspel, Burke & Mayer LLC: ‘the closely-held, family business often is the most significant asset of the business owner’s estate.’

Whether your company is middle-aged or mature, we can help you put a tax-efficient plan in place that will enable you to deploy your company’s surplus assets and excess cash to the best possible long-term advantage – for yourself and your dependents.

In the second part of this blog (Part 2: The elements of a plan) we will take you through a 10-point checklist to follow when developing your succession plan. Above all, it’s important to assemble the right team of professionals, as we noted a wealth advisor, an accountant and a lawyer. We have no wish to be alarmist, but:

Whatever you do, don’t go it alone.

Daryl Cooper, Portfolio Manager, Scotia Wealth Management, 306-343-3255.
Colleen Schneider, Wealth Advisor, Scotia Wealth Management, 306-664-1860.