Manage succession for your business

This standard is for entrepreneurs who need to manage succession for their business. At some point you will need to hand over your business to somebody else. You will have to consider when succession will start and finish, how to pass on key knowledge to your successor(s) and any future role you may have in the business. It is important to plan how the transitional period might work, any restructuring that will need to take place and contingency planning. Selecting the right successor and making sure they are ready, willing and able to take on the responsibilities, is key to the survival of your business. You must understand the factors that may cause the succession to fail, such as unclear succession plans, succession discussion left too late, incompetent, unprepared or unwilling successors, family rivalries, predecessors who will not relinquish control or who undermine the successor. It involves communicating with potential succession candidates, selecting the right successor(s), preparing the successor(s) to take over the business and preparing yourself for leaving the business.

You might need to do this if you are:

1. planning to retire or move onto other ventures;

2. developing an exit strategy for your business.

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1. identify the variety of succession options for your business
2. consult with experts to make sure your succession plans are as tax efficient
3. decide when an independent facilitator or a legal advisor would be beneficial to help you develop plans for succession
4. discuss ideas and options for succession with potential candidates
5. establish what the successors want from taking over your business
6. agree the future business values, goals and objectives for succession with potential successors
7. identify and manage any conflict of interest for business succession
8. explain your business processes, procedures, roles and responsibilities
9. assess the potential successor(s) skills, ambitions and likelihood of making your business successful
10. decide on the shareholding arrangements to benefit the business
11. confirm any future role you will have in the business
12. arrange the necessary training or handover for your successor(s)
13. carry out contingency planning and alternative succession arrangements
14. keep all documents relating to long term or interim succession up-to-date and secure
15. inform all relevant stakeholders about your succession arrangements
16. address factors that may cause the succession to fail
17. prepare yourself to leave the business
18. transfer your responsibilities to your successors at the agreed time
19. transfer the business following relevant legal and tax requirements

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Succession planning

1.   the process of preparation for succession and contingency planning

2.   the variety of exit strategies to consider, such as trade sale, management buyout, closing the business, etc

3.   why it is important to decide the succession route before consulting on the tax implications

4.   the techniques to enable successful succession to potential successors

5.   the factors and circumstances that may cause succession to fail

6.   the allocation of roles and responsibilities after succession

7.   the potential implications on the structure of the business after handover

8.   the type of role you might have in the business in the future

9.   the relevant documents such as succession plans, partnership agreements, shareholders agreements and wills

10.  why it is important that you let your successor(s) make decisions and take overrunning the business at the agreed time

11.  the stakeholders that need to be informed about succession

12.  the policy on share distribution the business should follow

13.  the attributes and skills required by your successors

14.  the training and handover procedures your successors may require

15.  the sources of legal help and advice about succession planning

16.  the ways to prepare yourself to leave the business

17.  how to approach the potential candidates about succession arrangements

18.  the ways to resolve any conflicts of interest, where these are identified

19.  the importance of communication with succession candidates

Laws and regulations

20.  the taxes, duties and reliefs that apply when you sell or gift a business or a business asset

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• Ambition
• Energy
• Strategic vision
• Interpersonal skills
• Technical knowledge

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1

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01 Mar 2027

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Current

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Original

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Instructus

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CFABD12

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Business, Administration and Law, Managers and Senior Officials

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2441

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success, business, idea, social, enterprise, customers, products, service, support, creative, idea, skills, needs, suppliers, cash, flow, legislation, marketing, market, trends, competitors, health and safety, VAT, equipment, costs, profit, staff, product

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