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Welcome: Site Map: Adviser Updates: Publications and Documents:
Business Succession Planning: Need for Asset or Buy/Sell Strategy Need for Liability or Key Person Strategy
Simple Succession Plan:
Complete Succession Plan:
One Page Strategy: Simplifying the Valuation Issue
Multiple Policy Approach:
One Page, Two Policy Strategy:
Other Issues:
Sole Proprietors and Families: Third Party Buy/Sell Strategies |
Negotiating a Succession Plan
The questions on the page "Why Do You Need a Succession Plan?" highlight the different perspectives people can have on Retirement and Death.
First to Die or First to Buy? Unfortunately, in a business relationship, you never know whether you will be "the first to die or the first to buy". Similarly, at the risk of perpetrating an even worse rhyme (!), when it comes to Retirement, you never really know whether you will be "gone tomorrow or having to borrow" (to pay out the Vendor).
Thinking as Both a Vendor and a Purchaser Ultimately, it helps to place yourself in the position of both a Vendor and a Purchaser, when you think about a Succession Plan. When you're the Vendor, you will negotiate diffferently to how you would negotiate if you were a Purchaser. A Vendor wants to maximise the Sale Price, a Purchaser wants to minimise it. So your expectations and how you would approach the negotiations depend on which hat you are wearing. The chances are that your Partners would have the same expectations as you would in the same situation.
The Time to Negotiate and Agree This makes for a problem if we wait for the event to arise. If we wait, everyone will know which hat they are wearing and they will negotiate from that perspective. If we negotiate a Succession Plan now, nobody knows whether they will be a Vendor or a Purchaser. However, if we understand the legitimate expectations of a Vendor and a Purchaser, it makes it a lot easier to design an even-handed Succession Plan.
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Adviser Tip A Complete Succession Plan is not just about Death, it's not just about Insurance and it's not just about selling your Equity.
Please contact us to arrange a meeting or teleconference.
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