The following are well known consequences of ineffective succession planning.
In short, the economic value of the business can be eroded or eliminated and the lives of owners, employees and their families can be severely impacted when succession planning is not:
Successful succession planning is a blend of art and science. There are business, estate, legal, investment, and tax considerations that address important facets of the business as well as the owner’s personal financial situation. These might include the value, survival, and growth of the business; retirement; and estate and tax issues.
Succession planning makes sense at anytime, but is particularly effective at least five to ten years prior to the planned retirement of the leader. Without effective succession planning, the business may need to be sold or merged upon the decision of the leader to retire. Often times, this is not the intent of the leader or family, and can result in significant power struggles, family quarrels, damage to the business, damage to the family relationships, along with a host of other problems.
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