Business succession is no easy feat. Here's everything you need to consider this approach.

Big changes require significant and sound planning. This is especially true when it comes to business succession planning. For business founders and owners, with time and age, the business becomes an investment, their life's work. An estate also affects many lives, including those of your employees, family members, and often before the business owner even thinks about it. Typically, a change of ownership or management can cause upheaval.

This is why it is necessary to think about succession as early as possible.  

As an entrepreneur, you decide the direction of the company and define the next moves. To achieve this, you need expert help, advice and personalized support. Many aspects must be taken into account and nothing should be left to chance.

Thanks to the experience and know-how accumulated over the years, succession planning specialists d’Impact Financial Engineering (IFE) sheds light on all the aspects to take into account and defines the necessary steps to structure the transfer of your business with complete peace of mind.

What are the challenges of succession planning?  

As an entrepreneur, succession planning allows you to measure family and inheritance consequences, resolve questions relating to your tax situation and your pension, while ensuring the preservation of the company you have developed. Each entrepreneur strives to ensure financing for the recovery and sustainability of the business.

Here are some aspects to consider when considering business succession:

• Restructure the business in light of a transfer
• Make decisions in matrimonial, inheritance and matters foresight
• Consider them tax aspects of business succession planning
• Identify and prepare a potential successor
• Maintain know-how and experience as part of the recovery
• Anticipate unforeseen events due to an unexpected loss of property or an inheritance dictated by external events
• Examine all possibilities and identify the expectations of each family member and other interested parties
• Ensure positive passage by creating the conditions for a successful succession

What is the succession planning process?  

Whether it is a Management buy-out (MBO), a Management buy-in (MBI), an IPO (IPO) or a sale to another company, planning for succession takes time (from a few days to several years). So it is useful to follow the following steps:

1. Launch of the succession process  

Once the transmission process begins, the parties involved think about it and define the team that will assist and carry out the transmission.

2. Assessment of the inventory

This step will consist of describing the entire transmission process within the company and the family. Consultations with stakeholders will be necessary to clearly define financial, organizational and personal requirements, objectives and roles to avoid friction during transmission. Using external specialists at this stage will help you bring these discussions to a successful conclusion and develop a good succession plan.

3. Evaluation and development of different possibilities  

The goal of this step is to translate the many requirements into logical, practical, and acceptable options for key participants, such as succession within the family or succession outside the family. This requires developing a wide range of scenarios and strategies and carefully weighing the pros and cons of each.

4. Preparing for implementation

Once the succession plan has been chosen, it is time to define the bases for its implementation. This involves giving potential successors solutions (both inside and outside the family), adapting business structures and resolving all financial and legal issues. Furthermore, it is equally important that internal and external communication about the entire process and its main effects is planned.

5. Business transfer  

Shortly after the estate is settled, and when the successor and the business are ready, the transfer of responsibilities begins. In the event of internal family succession or MBO, you will generally retain your functions. The settlement of the estate takes the form of a transition from the successor to the role of entrepreneur and ends with the withdrawal of the former entrepreneur. If the business is sold to an external buyer, this process is often more abrupt.

Drawing on our experiences, the business customer advisors du Impact Financial Engineering, surrounded by their specialized network in the field, will be at your side and will continue to support you in all phases of the succession process as coaches, even after the end of the transfer to help you explore new horizons in the future. Contact our independent estate planning consultancy.