From Internal Successors to M&A: Planning Your Business’ Next Chapter

Planning for your clients’ future is a fundamental tenet of your job. But have you made plans for your future?

Succession planning is an essential part of your business continuity plan. It gives you the opportunity to make intentional decisions about the future and longevity of the business you’ve built. With a comprehensive succession plan, you can:

• Ensure business continuity.

• Protect your clients’ interests.

• Provide peace of mind for your family, staff, and yourself.

There are several factors to consider when putting together a succession plan that addresses your business’ needs.

1. Do you plan on an internal versus external successor?
2. Do you plan to close the business, sell it or merge with another business, or transition ownership internally?
3. Do you have short-term and long-term contingency plans especially for unplanned exits?

No matter your preference, careful advance preparation is essential to make sure the plan is successful.

1. Internal vs. External Successor

Review the skills and experience of potential successors who can step into leadership roles. Ensure that all candidates are properly licensed and meet the regulatory requirements for taking over the business.

If no internal successor is available, consider others outside the business who can take over, and begin to plan for that.

2. Close, Sell, Merge, or Transition Internally 

Another key step is to decide on your exit strategy based on the needs, capabilities, structure of your business and your long-term goals.

If transitioning ownership internally is not possible, other options to consider include closing the business, selling or merging with another firm. Here are key considerations when a Merger or Acquisition is the best course of action.

• Engage experienced counsel to strategize and formulate NDAs, Term Sheets and Deal Documents.

• Get an independent third-party assessment of the company’s market value.

• Research potential buyers or partners that align with your business values.

• Ensure that adequate steps have been taken to prevent interruptions to business operations and client service during transitions.

3. Develop Short-Term and Long-Term Contingency Plans (Especially for Unplanned Exits)

As you plan for the succession of your business, it is equally important to make contingency plans for unexpected exits.

• Identify critical roles that must continue for the business to operate.

• Identify and delegate responsibilities to staff or external partners who can manage those critical tasks while you are unavailable.

• Identify those who will make key decisions in your absence.

While it may be tempting to wait until retirement, developing a comprehensive succession plan now provides a roadmap for protecting your business interests both in the short term and long term.

At Jacko Law Group, we work with our clients to plan, execute, review and revise their succession plans, making sure they have peace of mind for both planned and unexpected exits.

If you would like assistance developing or reviewing your business plan, contact us at 619.298.2880 or email [email protected].