Having spent decades building a successful financial advisory firm, you now know that it’s time to retire and to think about your successor.
This will, of course, be a difficult period with many obstacles to overcome. The biggest obstacles are likely to be financial in nature. This means you need to look at the monetary implications of whatever you decide on going forward.
The first thing to look at is how much your business is worth, because you can’t create a plan of succession without knowing that. Get expert help to set a fair market value for your company before moving forward.
Next, get professional help to learn how to mitigate the losses from estate tax and the other financial hurdles associated with succession, whether from your retirement or death. This will make sure that your company’s value is as high as possible for the next leader.
If you run a family company, it might be worth transferring ownership to your children immediately, as this can lessen the tax hit you’ll take during the succession period. This will demand that you reorganize somewhat and you will again need professional assistance to complete this smoothly. In any event, it will let you continue control the day to day operations of the business while your children control the common shares before the eventual transition.
In any event, your succession plan will be the framework for the future operations of your company and will guide your future decisions while providing a great starting point for the next leader. No matter what you choose to do, it’s recommended to start a minimum of five years in advance in order to have your business in the best shape for succession, however, if you’re a little late to the game, it’s never too late to start getting your plans in order.
Communication is key
It’s not just the credentials of your successor which are important to consider. Choosing a successor who is on the same page as you with regards to the future direction of the company. This will not only make the transition period far less bumpy, it will also improve the continuity of your business throughout the succession, decreasing the odds of clients and employees becoming unsettled and jumping ship.
Make sure you communicate clearly with your successor during the entire process. The tiniest of misunderstandings could create all manner of disagreements, resentments, and arguments between your subordinates, but these will be minimized with clear communication.
It’s key to ensure your plan is as detailed and precise as possible, with info on everything from how taxes
will be worked out to the distribution of shares of ownership. Provide everything that your successor will possibly need and leave nothing open to interpretation.
You’ve worked harder that most can imagine to build your company and now it’s time to think about the future. Most business owners will be anxious to leave a positive legacy that continues long after their departure. As such, it’s important to create a tight plan of succession that identifies and resolves all the potential monetary problems that may result.
Succession Link has built an online platform that makes it easy and convenient for you to find the perfect buyer for your financial practice or to locate a practice that is the right fit for an acquisition and the growth of your business. Click the link to find out how Succession Link can help you.