Leaving a business in capable hands can take years of forethought, planning, grooming and communication. Unfortunately, far too few business owners strategically prepare for their intended departure from the business. 61% of wealthy investors expect business succession planning advice to be a component of their financial plan, but only 6% have it included as part of their plan. 1 A properly structured succession plan can help you understand the value of your business, preserve that value and its growth potential, and pass it on intact to leave a legacy.

According to a recent survey,2 58% of business owners don’t have a succession plan. This lack of preparation is a major reason why only 30% of family businesses survive as they transition to the second generation, only 12% are still under the third generation, and only about 3% operate into the fourth generation or beyond.3

The successful transition of a business depends on several elements: the legal structure must suit the strategy, the strategy must address the interests of heirs, and the successors must be prepared and able to lead the business. While a comprehensive plan will address these and other points, below are five best practices business owners can follow as they plan their succession.

1. Start early

It’s never too early to formulate a succession plan. A thoughtfully constructed succession process can take several years. The longer you spend on succession planning, the smoother the transition process will likely be. Revisit the plan periodically to make sure it remains relevant to your current needs as your business continues to grow over time.

2. Assemble a trusted team of advisors

A succession plan will involve legal and financial aspects that require the expertise of an attorney, an accountant, a financial planner and an investment banker. In close partnership with our affiliated investment banking company, Intrepid Investment Bankers,4 we help our clients assemble a team of specialists and craft a well-structured plan that can make a profound impact on the value of their business and help them achieve their objectives.

3. Involve family in discussion and encourage input

When transitioning a business to family members, if the family or other heirs don’t agree with its terms or have input in the process, the plan stands little chance of success. Create an open dialogue among family members. Pay close attention to the personal feelings and expectations of everyone concerned as well as the goals of the business to eliminate conflict.


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