Don’t be like Logan Roy… deal with your Succession planning!

In the wake of the Succession series finale (no spoilers, we promise!), our Corporate team look at some of the key issues for an owner-managed or family business to consider when it comes to planning for the future and handing over ownership.

Running one’s own business is incredibly demanding and it’s very easy to ignore or push back the need to prepare an exit strategy and succession plan.

As much as we’ve enjoyed the uncertainty and in-fighting rife in the Roy family and Waystar RoyCo’s management team when mapping out the company’s future in Succession, in real life we don’t want drama or chaos worthy of an HBO masterpiece.

Preparing for change is best when those in power are ready to think about a future without them and are clear about what is to come. Resistance is natural and can be overcome gradually with the security of a plan, whereas denial is useless and damaging. Owner-managers need to recognise the inevitability of change and set aside time to consider their preferences, how to bring these about and how these will affect other key stakeholders. Such an exercise will highlight areas in which the business isn’t ready to adjust and give owners time and understanding to put in place the necessary structures, provisions, training etc. to ensure a smooth and productive transition.

Some important issues an owner-manager might want to consider are:

• Personal goals – how do you want to exit? What do you want from retirement?
• Timescale – when do you intend to leave/reduce involvement? How long is needed to prepare the business for this change?
• Value – how much are you seeking as part of your exit? Has the business been realistically valued?
• Vision – what do you want the business to look like without you? Do you have an identified successor?
• Tax – have you taken tax advice on the best options for you personally and for the business?
• Contingency – is there a plan in place for if the above doesn’t go to plan? What if you need to step away earlier due to ill health etc.?
• Structural issues – how will your exit be financed/structured? Will you sell your shares to your successor, the company, an employee ownership trust etc.?

Succession planning is also always at its best when treated as a two-way street. If intended successors are involved in almost a ‘negotiation’ around the future, this will enhance all parties’ feeling of investment and belonging in the business and its continuing success.

For further information on Business Succession Planning, please email our Corporate Team at corporate@mlplaw.co.uk or alternatively call us on 0161 926 9969 and also refer to our previous blogs Succession Planning Part 1 – Some Exit Options and Succession Planning Part 2 – Issues to Consider