Planning for Business Succession and What You Need to Know About Sales

Any number of major companies can illustrate the importance of business succession planning. Succession planning issues always make for interesting news subjects especially when they involved major companies like Disney, General Electric or Berkshire Hathaway. Although Disney had what they thought was a clear plan in place to replace their CEO, the individual intended to replace Bob Iger announced suddenly that he was leaving the company as well. 

It looks like from the perspective of analysts that Disney may need to extend the contract with the current CEO while they look for an appropriate successor. and of course, it comes as no shock to anyone that the company’s stock value took a drop this last week. Succession planning is just as important for smaller and family owned companies as it is for these major companies. Whether you plan to transfer your business to a family member or an outsider, it will more than likely involve some kind of formal transaction. Research shows that 34% of business owner respondents, in fact, have received a formal offer for their business but 88% of these decided not to sell saying that it simply wasn’t the right time.

Among business owners who had not yet received an offer, according to an RSM Middle Market Leadership Council survey, 22% believed that they were likely to sell in the future, raising the question about how they would transfer ownership if they did follow on this track. There are several different questions you need to think of when conducting your business succession planning. These include: