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How to get started on succession planning

Winter 2005

According to the 2004 CIBC Small Business Outlook Poll (conducted by Decima Research), 39% of small business owners plan to sell their businesses and 15% plan to have a family member take over. Yet two-thirds (67%) of the entrepreneurs polled said they had not yet broached the subject of who will take over the company with their business partner or family member.

A succession plan has many benefits, regardless of the size of your business and what stage of the business cycle it's in. An effective succession plan will help you:

  • arrange for the tax-effective transfer of your company's ownership and management.
  • maximize the value of your business before transition.
  • structure a retirement income that meets your needs and maximize your financial security.
  • protect against unforeseen events, including death and disability.
  • accomplish the smooth transfer of your business.

While it may seem to be a daunting task, remember that your CIBC business advisor can help you by working closely with you and drawing on the expertise of CIBC Investment Specialists and other professionals. Your advisors will provide you with:

A diagnosis of your situation. How well prepared is your business for a successful succession, right now? Is your estate plan and retirement plan up-to-date? Are you already working with qualified specialists (lawyers, accountants, tax experts)?

Objective advice and planning guidance. Based on the diagnosis of your situation, your CIBC advisors can discuss your specific succession planning needs and any special considerations, such as transitioning a family business, selling to a key person, or selling a farm business.

Solutions tailored to your needs. A documented action plan will draw together the investment and retirement elements of your succession plan. This acts as a valuable reference for you, your CIBC business advisor, and CIBC Investment Specialists. As your business grows and evolves, your succession plan should be updated so that it continues to meet your needs.

Depending on the nature of your business and your objectives, your succession plan may include several documents. In addition to a will and power of attorney, you may also need a shareholders' agreement, partnership agreement, buy-sell insurance, or one or more trust agreements.

While your CIBC advisors can help you establish the structure of your overall plan, you will need the services of lawyers, accountants, and tax specialists to draw up the various elements.

Your advisors can help you build an advisory team, provide guidance on investment and retirement planning, and address your concerns. Don't put off this important task. If you don't already have an up-to-date plan, contact your CIBC business advisor.

Trademarks and Disclaimers

The information in this article is believed to be accurate at the time of publishing; CIBC is not liable for any errors or omissions. This article is intended to provide general information and should not be construed as specific legal or tax advice. Individual circumstances and current events are critical to sound planning; anyone wishing to act on this article is best instructed to consult his/her CIBC business advisor.

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"CIBC For what matters." is a TM of CIBC.