Home' The Channel Magazine : September 2011 Contents National Newsagent September 2011
A good succession plan will allow for a smooth transition
of the business regardless of the circumstances which have
prompted it. The word succession seems to make business
owners think nothing needs to happen until they are thinking of
retiring. Nothing could be further from the truth. Succession
Planning involves business protection, business planning,
business growth and an understanding of the key elements of the
business. Succession Planning should start now.
Do you know what your business is worth? Do you know how
much it needs to be worth when you retire? Do you know how
much it would be worth 12 months after an involuntary exit by a
partner with no succession plan in place?
Many events could trigger the need for succession to take
place. A partner could go through an acrimonious divorce,
declare bankruptcy, die, go to jail, become ill and be unable to
work or decide to retire.
A succession plan is a contingency plan which looks after the
all aspects of the business. It will not only allow your business
to survive but also ensures your family receives the true value
of your interest in the business. It allows an orderly transition
of ownership to the remaining partners, family members or key
stakeholders rather than having to sell. A good succession plan
puts you in control.
At 65, Bob chose to retire from the business he set up with a
couple of business partners, Patrick and David.
Patrick and David had to buy Bob out however this was
complicated and escalated into a dispute since there was no
agreement in place in relation to sale price or how the existing
loan accounts should be managed.
A new partner was also needed for the business but Patrick
and David were unsure how to source an appropriate candidate
with the requisite skills and no one within the business had been
groomed to join the partnership.
A dispute arose over the value of the business and legal
proceedings were instituted. Patrick and David had to take out a
further loan to fund the buy-out and costs of legal proceedings.
Junior and support staff were ‘let go’ due to cost-cutting
measures taken to reduce cash flow pressures. Significant
goodwill was lost as Patrick and David were unable to offer
clients the same service standards and prompt turnaround times
due to reduced staffing levels.
Existing clients with ties to Bob found alternative suppliers
due to ‘ill feelings’ generated by acrimonious legal proceedings.
Business development activity decreased as the Patrick and
David struggled with additional operational duties and fewer
owners to share the workload. This resulted in a considerable
decrease in business earnings, which took more than two years
This entire scenario could have been avoided had the three
owners sat down and discussed all the issues with relation to
the business. How will the business be valued when one retires?
How will the buy-out be funded. A well documented plan allows
all parties to know what will happen regardless of the trigger
You do not have to battle through the complex process of
creating a succession plan by yourself. OAMPS Life Solutions
can provide you with the knowledge and expertise to make this
vital planning process as simple as possible for you.
OAMPS Life Solutions will be able to
arrange for a Business Risk Specialist
to assist you with:
Growth and Succession Planning Assessment
Business and Personal Insurance Protection
In-Depth Business Analysis
Business Life Planning
Personal Financial Plan
Selling Your Business
Will your business retire
when you retire?
No-one likes to think about it, but there will come a day where you will no longer
be part of your business. It may be your choice to sell up and retire, or you may be
forced to sell due to ill health or other reasons. Due to this inevitability, succession
is something that should be planned, not just allowed to happen.
Call OAMPS Life Solutions
today on 1800 466 842
or visit www.oamps.com.au
Closer to clients
Closer to communities®
For an obligation free quote call OAMPS today
1800 466 842
OAMPS Life Solutions ABN 67 074 697 537 AFSL 238318 - Ref: 0086SEP11
Will your business retire
when you retire?
A good succession plan will allow for a smooth transition of the business
regardless of the circumstances which have prompted it.
You do not have to battle through the complex process of creating a succession plan by yourself.
OAMPS Life Solutions can provide you with the knowledge and expertise to make this vital planning
process as simple as possible for you.
0086 - OAMSPS ANF Business Succession - 29 Aug.indd 1
29/08/11 9:40 AM
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