Are you a business owner? Do you have a succession plan? Most business owners are so concerned with satisfying customers, growing the business, and well, life, to think too much about it.“It’s too far off; I don’t have to think about it”, they say. As we get older though, those two little words grow in importance like an oncoming train headlight in a tunnel.
Succession planning is about your plan to exit your business. It requires careful planning and attention to exit in a way which meets your personal objectives and realises the full value of the business you’ve created. At Lewis Holdway Lawyers, we help business owners navigate the legal issues associated with succession planning.
What’s important to you?
The first step to succession planning is to define what’s important to you.
Do you want the business to continue with the next generation of your family or your management team?
Do you want to sell everything to a larger company?
Do you want to continue working in the business or the industry for a period of time after you’ve left?
Do you want to own a part of the business after you’ve left?
Do you want others to be able to share in the business you’ve created by issuing shares to the public (via an Initial Public Offering)?
Getting the right advice
To achieve these objectives, you’ll need to make decisions with all the right information and advice that’s tailored to your circumstances. Your ability to meet your objectives may change depending on your current structure. For instance, the value in your business might tied to a licence granted to a Company which could make selling the shares in the Company the only viable option. Or, you might be running a business through a discretionary trust which means you can’t automatically embark on an IPO. Alternatively, you may wish to delay your exit if you might be able to access the small business CGT retirement exemption by waiting just a little bit longer.
In all circumstances, the best decision will come after you’ve received the right advice.
Review
Whichever path chosen, it will be important to review your policies, employment, trading and supplier contracts to ensure that key assets and contracts of the business can be transferred with minimum fuss. If you are exiting by sale to a third party, this due diligence will increase the sale price of your business. If you’re planning an IPO, you’ll need to do it by law!
If you need any assistance developing your succession plan or selling your business, please contact Peter North, Senior Associate in the Business team on 03 9629 9629 or by email: petern@lewisholdway.com.au.
