(Part II) Objectives of the Succession Plan
In our last article we discussed why a well-constructed succession plan is necessary. In this article, we review the essential objectives the plan needs to address.
The objectives of succession planning and the methods used to accomplish these objectives are varied, but include the following:
It is important to involve children and other affected parties in the planning process so that they understand the owner’s overall objectives, including how equitable treatment is being achieved. Often, the owner and the owner’s spouse will be involved in the initial process and planning, and after a summary of the initial plan reflecting the desires of the owner is agreed upon, the children, both active and inactive, and possibly key employees, are brought into the planning process.
As a result of this process, the owner will clearly establish his or her plan as to who will succeed to ownership and control of the business, when ownership and control will transfer, and how it will be accomplished. By early planning, the owner will have many more options available so that the owner’s desires for both the welfare of the business as well as of his or her family can best be achieved.
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