Stewart McKelvey

BUSINESS SUCCESSION PLANNING IN ATLANTIC CANADA By Richard Niedermayer by Canadian Capital Magazine, 94% of respond- ent business owners felt it was important to build a succession plan, but only 38% had a succession plan in place. Further, 43% said they planned to sell or pass on the business in the family and 34% expected their transitional event to take place with- in the next five years. In Atlantic Canada, owners and entrepreneurs tend to stay active in their busi- nesses longer, making the succession issues some- what more challenging. Succession planning is broader than estate and tax A planning. It involves the identification of an appropri- ate exit strategy for the owner which addresses the management of the business, the financial situation of the owner and the personal/family concerns of the owner and other family members. For most owner- managers, their largest asset is their business and an appropriate succession plan can preserve that value. Regrettably, studies have shown that only about 30% 2 SUMMER 2011 DOING BUSINESS IN ATLANTIC CANADA high percentage of Atlantic Can- adian businesses are family and owner-managed, and these enter- prises are set to undergo signifi- cant transition over the next few years. In a recent survey conducted of businesses successfully transfer from the first to the second generation and only about 10% survive to the third generation. The Succession Planning Process – A Multi-Step Approach A formal business succession planning process usually involves working with a succession planning consult- ant who acts as a facilitator. The consultant focuses on fact-finding and family issues rather than on estate and tax planning issues. The consultant's role is to meet with the owner to understand the structure of the business, with family members to learn their goals and concerns, with the owner's advisors (such as the corporate lawyer, accountant and banker) to identify potential succession, financing, estate and tax plan- ning issues, and to then prepare the succession plan- ning deliverables and review them with the owner and his or her family. Those deliverables should include the following items: Contingency plan – this serves to stabilize the busi- ness and give the family peace of mind in the event of an unanticipated death or disability of a key stakeholder. For example, the plan could identify who would immediately assume responsibilities, W A O C P M NTI H N RT A L P C I A N I IT A TL A T N NT I ADA N IS G S N N ? UCCED A WHY I A SSION S

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