Some have described business succession planning more as a process than as a hard and fast rule.
For example, one article from a major online resource for investment and other financial information describes succession planning as a strategy for making sure the right talent is ready to replace existing leadership when the time comes.
A successful result is when the business faces minimal disruptions because of a leadership change and can continue to operate profitably.
While a business succession plan is very important, it alone has no legal weight. It is an outline documenting the desires of the organization’s current leadership about how future leadership will look perhaps 10, 20 or 30 years down the road.
A succession plan document that ultimately winds up in a real or electronic archive folder somewhere does nothing. It is no different than an old wish list or outline of business goals. It is not at all like a will that can stay in a safe for decades but still be legally binding when the time comes.
How do I make my succession plan more than a wish list?
When a closely held business in Colorado, like a family organization, has decided its succession plan, it will have to also take several additional legal steps to make sure that plan is in place.
Some of these steps might include appropriate estate planning to make sure capital in the business gets into the hands of the people that current leadership wants to take over.
Good estate planning can head off power struggles or other legal disputes over business succession.
Even if everyone within a Denver-area business is on the same page, an estate plan may also smooth the way for succession and put the business and its owners in a better tax or financial position.
Turning a succession plan into a reality may also involve certain buy-sell agreements, transfers of ownership and other business law matters.