Appearing in this months’ Business Cornwall magazine, our featured editorial by Aneta Williams, exploring business succession and exit planning.
The Covid 19 pandemic highlighted the importance of planning for the future of a business and prompted many business owners to think about their plans for the future, to attempt to engage the next generation in the business and to start planning for succession and/or exit.
Business succession is the process of transitioning the management and the ownership of the business to the next generation (whether family, management etc). This entails assessing the readiness and desire for those earmarked to take over the business and identifying the training and experience needed to facilitate it.
Having an informal succession plan or vague ideas is not as effective as a clear, documented and effectively communicated plan, together with robust implementation.
Succession planning not only involves the business itself and core operations but also establishing the ownership, management and developing governance i.e. having a clear structure that defines roles and responsibilities in the business.
Despite common belief that with the succession planning there will be transfer of business to the next generation it is useful to know that transfer of management does not mean transfer of ownership and both transfers do not need to happen at the same time, and a phased transfer should be considered.
The key to managing the future of a business is taking the time to develop a realistic plan (with honest discussions and assessments), and seek experienced professional advice.
Having a plan for the future of a business provides a level of certainty for everyone involved in the business.
Where succession is not possible (i.e. the earmarked individuals to success the business are not capable and/or interested), alternatives need to be considered e.g. sale of the business and therefore maximising value, incentivising a new management team, tax mitigation etc.
This article was written by Aneta Williams, RRL LLP, published for Business Cornwall magazine, on 8 June 2023 (Page 27): https://issuu.com/businesscornwall/docs/bc_jun23