Why Succession Planning

Why Initiate Succession Planning

Any business owner knows how much courage, stress and hard work is involved in getting their business to where it is today.  We can help you retrieve your capital investment to ensure both you and your family are protected both now and into the future.

When a shareholder active in business dies or stricken by accident or illness, such an event results in immediate stress. This affects families, shareowners, staff and customers.

In particular, what this means for the family is self-evident. Fear for the future, and grief for the immediate circumstances. Underlying these emotions is typically the stress of financial reserves and cessation of income. Realisation of investments, including every dollar of business investment, is now urgent.

We cannot reverse tragic circumstances, but a quality business agreement can certainly make sure your family gets the agreed amount of money in accordance with an agreed repayment schedule, should the worst happen. It’s a unique service that we know can be vital to have.

Why Engage Us

Our core experience is that business change will happen. We do not know when, but we do know unexpected change of equity ownership will generate emotion – which will vary between anger, apprehension, and grief.

The surviving business owners must step up to responsibility for the business and staff. They are unlikely to have available capacity to pay for the exiting shareholder equity, but they need to gain control of it. They will be under extreme pressure to arrange funding, but despite the circumstances ongoing owners will need to consider and when negotiate the equity price and the repayment schedule. Likely, there is no formalised agreement in place to regulate this process and without this it can be extraordinarily difficult to reach agreement on all points without the process breaking down.

In general, without speedy resolution, disagreement will escalate, often leading to a court of law. Without an agreement, family or an executor will inevitably put equity up for sale to external sources. They may have no choice, but that does not mitigate the damage caused to the ongoing shareholders, who can end up with a stranger on the board.

The Reasons Why We Should Be Engaged

  • Shareholders cannot afford to lose the value of their business capital. Who can? They need to ensure they minimise all possible risk.
  • We know that a breakup between business owners, regardless of the reason, will likely damage business capital value and make it difficult to maintain ongoing viability.
  • The ongoing confidence of staff, customers, bankers and the continuing shareholders is paramount.
  • Business owners loses money if a partnership breakup leaves them exposed without written rules to manage equity transfer.
  • The outgoing owner/estate wants a rapid return of capital by any legal means.
  • The ongoing owners need to protect their investment and maintain business viability.
  • All parties need to agree on how much the outgoing owners’ equity is worth – in a hurry, in circumstances of rapidly disintegrating trust, all with sub-optimal funding implications.
  • BSP sourced legal agreements are extraordinary valuable to a business when confronted with a crisis of equity ownership. If disaster strikes, a business will stay viable, keeping staff, customers, and reputation.
  • Even better, continuing shareowners do not suffer the wasted time and money otherwise spent on legal disputes.