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  Business Succession 101  

Succession Options for You and Your Business

There are two broad categories of succession options. The first is some form of family succession and the second is the sale of the business or its assets outside the family.  

Family succession includes two distinct options. The first is to maintain family ownership and management. The second is to maintain family ownership and control of the board of directors but to transition to non-family management.

The sale of the business to external parties involves a number of potential buyers with different implications for the seller and other stakeholders. These parties include an existing competitor, strategic buyer, current management, management/employee groups (i.e. worker co-op), an unrelated business (i.e. Non-Profit looking to operate the business as a social enterprise to deliver on their mission) and lastly although unlikely an Initial Public Offering (IPO). The liquidation of the business could be considered a form of sale, although one in which the business doesn’t survive.

Business Owner Considerations
Personal Issues

From the business owner’s perspective, there are many personal issues that need to be addressed if succession planning is to be implemented successfully. 


To commence succession planning brings with it the explicit recognition that a certain period of one’s life is coming to an end.  Many business people’s sense of themselves, their self-worth, their places in the family and the community are intimately tied up with the business they have created. The idea of moving forward into a new situation, no longer controlling and directing the business, can leave for many a daunting gap, both emotionally and practically.

Succession planning in the family business also means, for the business owner, dealing with family issues and feelings among the owner, spouse and children.

For many small business owners, the business may be their single most significant financial asset and their only source of retirement income.

The business owner may also have developed some long-term personal relationships with managers and employees which he/she will want to consider in a succession plan.

Business Issues

One of the key issues in succession planning is a business valuation.  Whether the business owner is looking for a family transition or an external sale, virtually all business owners will need to carry out a business valuation to determine the fair market value of the business.

Another key element for the business is a management and governance succession plan. No matter what form the succession takes, the management and governance system will require change. What was appropriate for success under the original owner will not meet the needs of the business when new management and ownership are put into place.

Effective successions take significant time to plan and implement. Of course, the actual amount of time will vary with the complexity of the situation, the goals of the owner and the succession option chosen. However, the general consensus is that the sooner the business owner starts to look at the issues and plan for an appropriate succession, the better.

Technical Consideration & Advice

Successful succession planning generally will require advice and assistance from a number of professionals. Some issues that need to be addressed include: business valuation; taxation implications for the business owner, inheritors and purchaser(s); legal agreements such as trusts, share or asset purchase agreements; shareholder agreements, share redemption plans; retirement and estate planning; and financing agreements (vendor financing).

Each business is unique and there is no one-size-fits-all package for developing and implementing a succession plan. The following are general guidelines which will be helpful in going through this process.

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Other Stakeholder Considerations


Managers are the repositories of key business information. Because they often have long-standing contacts with customers, suppliers and regulators, they may be vital for the continued success of the business. They also will be aware of, and likely be required to assist with, the issues that need to be addressed in getting the business ready for either a family transition or a sale to an outsider.  


Unless the succession takes the form of an employee/management buyout, line employees will have little necessary involvement in any planning process. However, it is important for morale that appropriate information is provided to them so that any uncertainty about the future of the company is addressed.

Customers & Suppliers

Both customers and suppliers are key to the future of the business. A successful succession will need to assure both customers and suppliers that the smooth functioning and the financial stability of the business will be maintained.

Local Community

The local community may also have an important stake in the business. In many small communities, a local business often contributes to the community’s identity, provides crucial jobs and goods and services which may not otherwise be readily available, and helps to create a critical mass of economic activity which is important for the well-being of the community as a whole.

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The Succession Process
(and how Flourish can help)
For Business Owners
  1. Get an introduction to the succession option and the issues that need to be addressed in order to ensure a successful succession plan.

  2. Determine the goals of the business owner and other key stakeholders identified by the owner, as they are crucial to the owner’s goals.  This will include spouse, other family members and managers. What are their needs, and can their needs fit with the owner’s goals and desired outcomes? Review and confirm goals. Through this process some of the primary goals may be revised to reflect the realities of the situation. 

  3. Determine the best option for meeting these goals. This may require preliminary work to assess different possibilities and to clarify some of the technical issues noted above.

  4. Map out key steps to develop and implement the option, with necessary timelines and sources of expertise. Determine who is responsible for moving the process forward. This should be detailed as it relates to the internal business issues during and after transition, ownership and governance changes, and taxation and retirement planning issues.

  5. Draft all the required legal documents. Review with advisors and modify as required. Finalize and sign documents. 

  6. Implement the plan, monitor its progress and modify, if required.

How Flourish Can Help

Whether you’re looking to buy or sell a business, Flourish can help you navigate the crucial first steps of the succession process, including: 

  • Clarifying our succession priorities, and those of your key internal stakeholders;

  • Choosing your best succession option; and

  • Building a team of professional advisors to support you.


If social succession turns out to be right for you, we can take you right through the process, including:


  • Creating a succession plan;

  • Implementing the succession plan and preparing to transition;

  • Finding and engaging with a potential buyer or seller;

  • Negotiating the terms of the transition; and

  • Implementing the transition.

Even if social succession isn’t the right fit, we can connect you with an expert who specializes in your chosen option.

It all starts with an initial, free discussion. 

Social Succession Options

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Get in Touch to Learn More!

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