Business owner overview > Succession planning

You've built a successful company - make it built to last

There are internal and external transition options. Inside options include a sale or gift to family members, sale to an existing ownership partner or key employee, management buyout, and an ESOP (Employee Stock Ownership Plan). Outside options include a sale to a third-party, private equity sale, and liquidation. There are pros and cons to each exit strategy. You’ll need to spend time not only in the selection process, but also giving consideration to how your chosen exit strategy will impact your future income needs.

No, only children working in the business should get the business. The children working in the business should not be forced to share in the decision making and profits of the business with siblings who have no involvement. Instead, children not involved in the business should get other assets of equal value. Estate equalization is a strategy that helps ensure all of your children get a fair and equitable share of your estate while keeping the business in the hands of the decision makers who are running it day to day.

When choosing a successor, your decision should be based on who can do the best job — not on prejudice, biases or a sense of entitlement. There are some basic traits you should look for in the individual you choose to take over your business, which we call the 5 C’s: Character, Confidence, Capability, Competence, and Commitment. Sometimes the right successor isn’t in the business today and owners need to make the hard decision that’s in the best interest of the business to either hire outside management or sell the business to a third party.

Choose the right successor is critical to the long-term success of your business. To adequately prepare them for assuming the leadership role in the business you should Implement a successor development plan begins with an assessment of the successor’s current skills and interests, and defines what additional experience, education, and training must be achieved. In addition, successors should ideally spend 3-5 years gaining work experience outside the business and utilize a mentor outside the business to act as a coach, advisor, and educator.