Whether you’re the CEO of a large corporation or the owner of a family business, you need to have a succession plan in place. Without it, your passing or incapacitation will wreak havoc on the business, leading to confusion, instability, turnover, and loss of assets. It can also have an effect on your family as they get involved in disputes over shares and assets connected to your business.
Properly structured executive succession planning is vital to business continuity, asset protection, and overall peace of mind. Hart & David can help you put together an executive succession plan that prevents losses and preserves your company’s stability.
Protecting Your Business
By working with our attorneys to develop a sound executive succession plan, you can head off many devastating problems and disputes, including:
- Disputes between other executives or family members about succession
- Disputes over allocation of assets
- Possible loss of assets
- High turnover as employees leave the unstable business environment
- Disputes among shareholders over shares
- Assets being passed on to relatives, shareholders, or other entities
- Excess shares or assets that cannot be purchased by shareholders
Succession planning is part of your due diligence responsibilities, and it must be done well in advance. If you wait until something happens—or until it seems likely to happen—it will be too late. To keep customers, investors, employees, partners, and other stakeholders, you need a smooth, well-planned transition from one CEO to the next. Our attorneys can provide invaluable assistance with accomplishing just that.
Great leaders don’t arise overnight, but accidents, disease, and other incapacitating events can and often do. No matter what stage of life you’re in, you need a succession plan that is both fair and effective to ensure that your company remains in good hands after you are no longer able to fulfill your executive role.
To be most effective, your executive succession plan needs to incorporate the following characteristics:
- Fair process for selecting the successor to minimize disputes
- Detailed methodologies for how candidates will be vetted, selected, and trained
- Time frame in which selection and training can occur
- Readily executable with practical procedures to follow
- Plans for each executive position, not just that of the CEO
- Continuously updated to keep up with the evolving nature of your corporate atmosphere
This plan will help detail the responsibilities of executives and board members in the succession process while aligning goals and fortifying business continuity.
Legal Face of Succession Planning
In addition to the development of procedures, contracts, and policies regarding executive succession, there are a number of legal regulations that play a significant role, particularly with respect to how assets are handled during a transition. Hart & David will help you develop a plan that will account for the protection of assets as well as maintaining the solidity of your company.
We can help develop your succession plan in a way that is consistent with your specific corporate structure and industry. Services include:
- Retention planning, which keeps business assets within the family
- Buy-sell retention planning, which allows shareholders a greater role in the retention of assets
- Development of valuation mechanisms for shares
- Drafting documents and procedures
Plans must be properly drafted to be effective, and doing that requires extensive legal knowledge. Hart & David provides skilled legal advising to leaders and businesses when developing their executive succession plans. For a free consultation, contact us today.