Succession planning - How to successfully transition a business to family members.

January 2019 - Planning, clarity and transparency are key when it comes to business succession.

Three steps cover the process of succession:

  • Identify goals and what you would like to happen.
  • Engage others in the process, articulate your thoughts clearly, consider a time horizon.
  • Review strengths of potential successors objectively. Keep in mind the best interests of the business.

Once clear on your desired outcome, engage family members to ensure that they want to be involved, confirm goals and plans are aligned; putting further resources towards designing and implementing an
unwanted plan is futile. An advisor can assist in facilitating these discussions.

If no-one has the skills, ability, or willingness to take on the business, an outside sale could be the best option to protect wealth and ensure the longevity of the business you have built. It will also avoid unnecessary strain on relationships if all parties aren’t in agreement.

Start as early as possible.

The best time to put an exit strategy together is when the business is being established. This isn’t always possible, however, developing a plan from the earliest possible point allows for the best outcome in terms of timing and smooth transition.

Planning ahead means that the process of succession better deals with any possible risks and complications. It also means that the successor has time to be coached in advance, and shared decision making can help successors before they take the reins.

There is more to family business than ownership. Management succession plans involve training family that will move into managerial roles, or can mean that existing staff are groomed to take on the role in place of an exiting family member.

Management of a business can have a profound impact on results, so considering this is as important as ownership transition.

Similarly, it is healthy to recognise that equality and fairness are not always the same. Not everyone has to have an equal role in the business and not everyone has to share in the business equally. Equity for each individual’s contribution will need to be considered.

Sourcing assistance from professionals.

Not giving a business transition the attention and planning it deserves will cause undue stress and is a recipe for unintended outcomes.

Making sure your advisors are involved will assist in objective thinking to ensure the goals of all parties are considered and the process is as pain free as possible. 

Investment structure, restructure, estate plans, retirement goals, taxation consequences, complex tax matters affecting or preventing a transition are all things that advisors will assist you with along the way.


Whether you are new to succession planning, or an old hand looking for a new approach, your Cutcher & Neale Client Advisor is here to assist.

Get in touch

Topics: Tax, Business, Income, Small to Medium Business, Tax Cuts, Personal Income

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