Succession planning by Richard Riddell

Succession planning takes many forms, whether it be identifying and developing people to take on roles within an organisation to safeguard against the loss of an employee or provide motivation to staff for career planning, through to the transfer of businesses to the next generation whether it be to a family member, a loyal staff member, or sale of the business to the open market.

Succession with regard to employee development and motivation is best done with the help of a Human Resources expert.

When it comes to how to exit your business and transfer ownership, this can be actioned in many different ways. The process begins with a meeting with the owners to learn about their business and to discuss their thoughts about how they wish to exit their business and their preferred successor, such as family, staff, next-door neighbour, trade competitor, sell on the open market to the highest bidder, etc.

The next stage is to summarise these thoughts and discuss the pros and cons of the options identified. From this a preferred strategy can be put together.

The next stage is the most important with regard to a succession plan’s success, especially if the ultimate beneficiaries are going to be family and they are adults. It is strongly recommended that a family meeting is held to inform them of the plan, so they know how it is going to affect them.

It is at this time they can raise any concerns and issues, and these can be taken into account and satisfied. This is to avoid complications in the future as many well intended succession plans have unfortunately ended up in the courts as a party has felt aggrieved, and a lot of the wealth that has been hard earned by the parents efforts has been lost to legal costs, and family relationships have been destroyed and disrupted which was certainly not the intention of the Succession Plan.

Once all parties are satisfied with the way forward, then the right legal and accounting structures are put in place and the Plan is implemented.

For any further information please contact the Farming Growth team.