One of the most common myths about business succession planning is that all you need is a buy-sell agreement. There’s no doubt that a buy-sell agreement may be an important component of your overall strategy, but it’s unlikely to be the only piece.

There are plenty of reasons to have a business succession plan in place as soon as possible, including:

• Avoiding lack of continuity to impact clients
• Having a clear vision about how the company can be sold or divided in the event of a sudden crisis
• Protecting an owner’s equity
• Preparing the next generation of leaders to step up to the plate

Your succession plan should be comprehensive and it should be a living plan. It’s not enough to have a basic idea about how things should happen in the event that an owner unexpectedly or even willingly departs the company. The best-laid business succession plans also have a systematic expectation regarding how ownership will be transferred. This includes a backup plan if the initial strategy is, for some reason, unachievable. 

One benefit of succession planning that many owners don’t fully realize is that it can be used to lower risk to allow growth, ultimately boosting the company’s value. One key issue that can be difficult to calculate for the valuation of any business is known as the company’s “goodwill.” The extent to which this can be transferred to future owners will significantly impact the value of the company. If you approach succession planning with the right frame of mind, this should include transferring top clients to the succession team so that client confidence can be maintained.

In order to get the most out of succession planning, it should be completed as soon as possible and be something that leaders return to over time if circumstances change. To get started today, contact an experienced Mississippi business succession planning attorney.