Succession
Succession planning is the process of preparing for a change in who owns or runs a business, whether the next leader is family, staff or a new owner.
Succession planning covers who will lead and who will own the company when you step back. It looks at people, money, legal documents and timing.
For example, an owner plans to leave in five years. She names a possible successor, trains that person for two years, updates the legal documents and meets with her tax adviser to compare sale and transfer options.
It matters because a plan avoids a crisis. A sudden illness or a lost key employee can hurt value fast. A written plan protects your team, your customers and your family.
Succession and exit planning go together. The choice may be a family handoff, a sale to partners, or a sale or recapitalization with an investor. Each path changes how much you receive and what role you keep.
Start early, and involve your lawyer and tax adviser. Review the choices in business succession and exit options. Related: exit strategy.
Related terms
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