Why you should consider a succession plan for your business

7 December 2015

A succession plan…”Huh?” you might say! Well it’s a plan most businesses should consider as it enables owners to have an appropriate exit strategy, if required. For many business owners an exit strategy is a vital but is rarely a priority as it is perceived as an event in the ‘future’ and not a factor effecting current business strategy.

However, current business strategy should always be considered over the long-term and the exit of owners/managers must be part of the strategy – not an afterthought. A succession plan can form part of a five to ten year strategy and should be highly considered.

A successful succession plan should identify the key targets of the owners and management. Aligning these interests allows business transparency between management and ownership, formulating key performance indicators. A good succession plan can help you realise your business plan by identifying, training and retaining key personnel ensuring that certain personalities are in the most appropriate roles; therefore, safeguarding your long-term goals.

Alternatively, a succession plan could be focused externally where you are looking to sell to a competitor, private equity firm or other interested party. By producing profits for at least three years (preferably five), this will attract the right interest in your business.

Such a plan, once devised, needs regular review to ensure personal situations and expectations have not changed.

If you have any queries regarding the creation of a succession plan or would like us to review your circumstances, please contact us.

For further information on this blog post, please contact our corporate finance specialist Tom O’Brien.