Overview
Not everyone attaches the same meaning to "business succession
planning". It is perhaps best described as planning for the
transition of the ownership or management of a business.
Business succession planning is different from "estate
planning". An estate plan deals with who gets what and when
in the case of the owner or controller of the business dying.
It may involve the appointment of a Special Executor to deal with
the business. However, business succession issues can be quite
separate from this. A business succession plan deals with the
passing of control of the running of the business during the
lifetime of the current owner or controller.
It is one thing to consider the death of the owner on control of
the business. It is possibly more likely that they will be
disabled or suffer severe illness during their working life
and this needs to be taken account of when preparing business
succession plans.
Where there are a number of proprietors of a closely held
business, then often buy/sell agreements are used to deal with the
orderly transfer of equity in certain events such as death trauma
or total and permanent disability. Businesses may be owned in
different structures involving partnerships, trusts and/or
companies. Certain events affecting key personnel trigger the
orderly transfer of equity.
Developing successful business succession planning will often
involve a number of professional advisers depending upon the
circumstances of each case and the needs of the parties.