How to begin the process of succession planning

On Behalf of | Feb 3, 2020 | Firm News |

If you own a company that is based in Massachusetts or any other state, it is important to have a succession plan in place. Such a plan can help your company survive after you choose to transfer or sell your ownership stake to another person or company. It can also ensure that your company remains viable if you become ill or pass away unexpectedly.

Gather and organize financial data

The first step that you’ll want to take when charting the future of your company is to gather and organize its financial documents. The more information that you can provide to a lender or buyer, the easier it will make it to sell the company or obtain financial assistance. Having information organized can also make it easier for other owners or surviving family members to obtain favorable sale or loan terms in an emergency.

Make sure a successor can easily run the business

Your successor should have access to bank account numbers, passwords to email accounts and contact information for IT team members. Whoever takes over the business should also have access to customer lists and any other data that can help avoid any unnecessary interruptions when the next owner takes over.

Think about who will run the business in the future

There is never a bad time to start thinking about who will run the company after you decide to retire. In some cases, your successor will be a key employee or group of key employees that understand the industry and are loyal to your brand. Ideally, you will start teaching them skills that they will need to run the company when the time comes to hand it over. It is also a good idea to negotiate a buy/sell agreement as early as possible to ensure a smooth transfer of ownership.

Ideally, you’ll begin the succession planning process the day that you open your business. An attorney may be able to help identify key employees, craft buy/sell agreements and resolve any ownership disputes that may arise in the future.