Succession planning is a difficult process. To sell or gift, or buy or finance the transfer of the company can take years to complete. Most “second generation buyers do not have the type of finances needed to outright purchase the company and most senior generation members do not have the finances to just give the business away. Part of succession planning can include a process of generating new income to assist the next generation in accumulating the purchase price and to fund the senior generations retirement. A wide variety of family and business issues MUST be discussed and agreed upon in order to have a succession plan that works. Issues including:
*Dealing with disgruntled shareholders
*Establishing a decision making process with all generations and siblings
*Establishing duties and job descriptions
*Establishing compensation/incentive plan
*Developing of sufficient financial knowledge concerning cash flow, inventory etc.
*Establishing Family Business Meetings
*Defining Family Member
*How family members enter and leave the business
*Establishing a family code of conduct
*How the company is going to be purchased etc.
These issues and many more have to be addressed and resolved as part of the succession planning process. Many experts state that it takes, at least, 5 to 10 years to complete a good succession plan. Many of the agreements and documents that govern how the transition will take place can be completed first, but the actual transition can take years to finalize. It is not a slam dunk.