Business Focus Reference Sheet
MOVING ON
Succession Planning
SERIES How to transfer control of family and private businesses.
By: Lucio Dana & Harry Kras
Family business owners work long and
hard and deserve to enjoy the fruits of
their labours. But when it comes time
to retire or move on to something else,
what have they got to show for it? This
reference sheet explores how you can
ensure your business can go on without
you, and how you can have a financially
secure and enjoyable retirement.
Not if but when.
Where will your business be in 5-10
years, or when you decide its time for
you to do something else? Exiting the
business is not a question of if but
when. Planning for the eventuality helps
provide you with some say in how the
future unfolds.
“Business owner-managers
considering exiting their Business owner-managers considering
business have two options: exiting their business have two options:
transfer (continuity of the business) or
transfer (continuity of the
termination (cessation of the business).
business) or termination
(cessation of the business).” If you choose to transfer the business,
you can:
• Transfer to co-owners or unrelated
partners – a ‘buy-sell agreement’
makes it easier
• Transfer to staff –usually long term
employees with the ability and
financial resources
• Transfer to third parties – making
the business ‘sale ready’ is critical
• Transfer to family members – suc-
cession planning is needed
The first three options will result in a
realisation of the family’s wealth that
is currently locked up in the business.
The last, succession, involves the
transfer of wealth from one generation
to the next.
The main reason for exploring exit
options and undertaking business
continuity planning is to maximise the
Bendigo Bank Ltd ABN 11 068 049 178, AFSL 237879, Fountain Court Bendigo Vic 3550.
Copies of this and related Business Focus Reference Sheets are available from your
Business Banking Manager or from our website.
www.bendigobank.com.au/business
realisable value of the business and
provide business owners with peace of
mind. This applies whether the business
is sold (to third parties, partners or
employees), or taken on by willing and
able family members.
Continuity and succession planning
helps you to:
• increase the economic value of the
business and provide owners with
considered exit options and strate-
gies.
• safeguard the long term health
of the business and revitalise
strategy
• identify, prepare and install
successor(s) and map out other
family members’ roles
• protect and reward loyal employees
and perpetuate employment op-
portunities
• provide financial security for the
current owners and their spouses
in retirement
• make the most of family assets
and preserve wealth
• give opportunities to children by
passing on rewards of ownership
Succession Planning –
Transfer to Family
Though succession planning will have an
impact on all the stakeholders in your
business the people primarily affected
are the incumbents and their succes-
sors.
The Incumbent
From the incumbent’s perspective, suc-
cession planning is about answering
questions such as how to:
• decide whether to keep the
business or not.
• determine the best exit strategy.
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Business Focus Reference Sheet
“Though succession planning • define fairness for all children and
minority shareholders (some of
will have an impact on all the
whom may not be employed in the
stakeholders in your business company).
the people primarily affected • ensure that the business will be
are the incumbents and their preserved for the next generation
successors.” or be sold and passed success-
fully to non-family owners
• work harmoniously with family
members, moderate conflict and
simultaneously manage a company
for profit.
• choose, train and empower future
leaders and successors.
• achieving the objectives of the
next generation without sacrific-
ing the dignity and security of the
founding generation,
• develop a personal plan, a family
plan and a compatible business
plan.
• decide whether to include
outsiders on the Board of
Directors or an Advisory Board.
Do you have potential succes-
sors who are both willing and
able?
To have a successful succession,
you must ensure that you have suc-
cessors, willing and able to take over
the business, based on agreed time-
tables and conditions. Transferring
the business to successors is about
creating a shared vision for the future of
the business and working co-operatively
during the transition period to achieve
results that meet expectations of all
parties. It’s about creating a ‘win-win’
strategy based on a genuine partner-
ship.
The Successor
From the successors perspective consid-
erations include –
• understanding the true reasons
for accepting the role. Is it from a
sense of obligation to the family,
the perks, or just that it beats
working for someone else?
• what happens if it doesn’t work
out? What other opportunities do
you forgo?
Bendigo Bank Ltd ABN 11 068 049 178, AFSL 237879, Fountain Court Bendigo Vic 3550.
Copies of this and related Business Focus Reference Sheets are available from your
Business Banking Manager or from our website.
www.bendigobank.com.au/business
• how will the timing work? Are you
prepared to stay even though con-
temporaries seem to be moving up
the ladder in the corporate world?
• how will you work with other
family members involved in the
business?
• what will you be able to contribute
to the ongoing growth and success
of the business?
• will you be able to create a leader-
ship persona that is distinct from
the current leader?
Consideration of these issues not only
involves considerable sole searching
but a commitment to ongoing devel-
opment. This will include not just
technical industry knowledge but also
management and leadership training
and the creation of your own support
networks.
Consideration of
these issues not only
involves considerable
sole searching but a
commitment to ongoing
development. This will
include not just technical
industry knowledge but
also management and
leadership training and
the creation of your own
support networks.
The Elements of a Succession
Plan
The backbone of any succession effort
is a good plan. This document is a
guide to managing all the issues that
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Business Focus Reference Sheet

“Transferring a business can be are likely to surface during this period grappling with the same issues as you
and will generally deal with issues such are.
accomplished more effectively
as:
if you fully understand the Transferring a business can be ac-
process and have planned it • the process for choosing a complished more effectively if you
well in advance.” successor fully understand the process and have
• a personal development plan for planned it well in advance. Planning the
the successor transition process not only maximises
• leadership development for the the sale price, but also increases the
successor likelihood that you can make a timely
• evolving the leadership roles and graceful exit. It enables you to be
of incumbent and successor, in control because you have a clear idea
including job descriptions for of where you are going and how you
both at various stages during the propose to get there.
process.
• a meaningful and financially secure
retirement for the current leader Once complete, the
• a plan to communicate the succes-
sion decisions to the family, the succession plan should
company and the community.
• a plan for organisational suc- be reviewed annually
cession, covering evolution of
top management and the board, to ensure that it keeps
career paths for key managers and
future family participation in the up with changing
business.
circumstances.
Once complete, the succession plan
should be reviewed annually to ensure
that it keeps up with changing circum-
stances.

Where do I start?

Take a few minutes and write a page in

answer to each of these questions:

• What do I want for myself?

• What do I want for my family?
• What does my family want?
• What do I want for my business?

Review these questions with your

family, colleagues and advisers. Your ACKNOWLEDGEMENTS
accountant, solicitor, financier, financial This reference sheet was provided by Lucio
Information to help you
grow your business planner and others have key roles to Dana & Harry Kras. This material was first
MOVING ON successfully. play in ensuring an effective succession. presented as part of the Family Business
SERIES Some of the titles in this
Organisations such as Family Business Australia New Members induction program
series includes:
Australia can also help with background 2005. Lucio and Harry are succession
9 Succession Planning information and by introducing you to planners with the Family Business Resource
a network of other families who are Centre. http://www.fbrc.com.au/

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Bendigo Bank Business Focus Newsletter.
Bendigo Bank Ltd ABN 11 068 049 178, AFSL 237879, Fountain Court Bendigo Vic 3550.
Copies of this and related Business Focus Reference Sheets are available from your
Business Banking Manager or from our website.
www.bendigobank.com.au/business
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