Six keys for succeeding in succession planning


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By Lyndell Grey and Wendy Penman

You’ve worked hard to build your business to where it is today, but having a solid plan for after the working years is equally as important for your prosperity.

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The purpose of this type of planning is to create a clear exit path that is simple, yet effective at meeting your personal retirement plans and business goals. Defining your vision for the future and developing your succession goals are strategic ways to ensure your succession plans are achieved.

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No two families, or businesses, are the same. An exit plan must address a family’s unique situation. Transferring a business to family members or business partners is one common transition strategy. Preparing to sell the business to a third party is another option.

In either case, advance planning can help preserve family and partnership harmony during what is often an emotional and conflict-triggering process. For business succession to be successful, it needs to balance the needs and goals of all involved.

The framework of the succession plan includes several key assessments. Ideally, the following six assessments would be conducted in advance of your intended retirement:

Aptitude and desire

Assess these qualities within your children or key people who may take over the business. Parents/owners often have difficulty with this process. Independent firms with business facilitators can help with the analysis by eliminating the sensitivity and emotions that go along with it.

Future viability

Having a solid knowledge of the industry, future competition and opportunities is crucial. This identifies the businesses strengths and weaknesses and gives the owner a better understanding of the risks, challenges and merits of keeping or selling the company.

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Business valuation

The company’s value needs to be established prior to exit to shed light on the financial viability of your retirement and how much risk can be taken to achieve retirement goals.


Have an awareness of factors out of your control that may affect a sale. This assessment will help determine if retaining ownership or selling the business is prudent.

Tax planning

This is often a key focus of the seller, but should not be the sole focus. Succession planning must be done in conjunction with a view of the overall financial picture.

Lifestyle planning

Evaluate what you want your lifestyle to look like after the sale of your business. How will you source income? How will your lifestyle change when you are no longer involved with the business? How will these factors impact your family and loved ones?

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It is never too early to start the process and develop the framework for your succession planning. Whether you’re thinking of keeping your business in the family or exploring third-party options, the most important thing to have on your side is a well-thought-out strategy.

Lyndell Grey and Wendy Penman are investment advisers with RBC Dominion Securities.

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