Many successful businesses will have implemented a business plan that includes information such as cash flow projections, sales forecasts, market share, supply sources and production costs. This information helps the business owners capitalise on opportunities presented in the marketplace and to prepare for contingencies that may arise. But while a sound business plan is seen as essential, many businesses fail to have a financial plan in place.
How does an agreement help?
A Business Succession Agreement provides certainty that the value of your efforts in building your business wealth will pass to your family or nominated successor should something untoward happen to you. It means you will not be dependent on the goodwill of your business partner(s) to ensure your family receives their entitlements. It agrees in advance the values of the components of your business and enables you to continue to grow your business with the peace of mind that your family has been provided for.
What is included?
Business Succession Agreements can incorporate all aspects of an entities operation. For example, individual partners may own a building occupied by the trading company, which has, as its shareholders, discretionary trusts in a partnership. Only one agreement is required to cover all structures.
The agreement will incorporate trigger events such as retirement, bankruptcy, criminal convictions, death, disablement and cessation of directors or partnership. Factors such as restriction of trade, valuation of assets and debt repayment will all be considered