What is succession planning?

Do you ever lay awake at night dreaming about some large national chain or a wealthy competitor buying out your business? Or, like 78% of Canadian business owners, are you relying on the sale of your business to fund your retirement?

The reality is that very few businesses are actually bought and sold the “traditional way”. Many businesses are in specific industries that require a specialized set of skills to operate, which severely limits the number of potential purchasers in a given market.

A detailed exit plan should be part of every entrepreneur's long term business strategy. The best way to achieve this is through succession planning. We will help you develop a plan to prepare your business for sale to either an existing employee or a qualified outside candidate.

Generally speaking, the purchaser will assume control and responsibility of the company for a predetermined sale price (usually higher than market value). The seller will then receive installment payments over a multi-year timeline until the balance of the business is paid off. There are many variations of this arrangement including some that contractually entitle the seller to an annuity or royalties for perpetuity.

Succession plans, as with any sale, can be complicated. There are a lot of factors to consider including possible capital gains and income tax implications. Fortunately at IBEX, succession planning is our specialty! Our network of financial and legal professionals are ready to help. From finding the right candidate to due diligence, to the day you hand over the keys, we will guide you every step of the way!