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 About the Book

● This book talks about the approach to initiate succession planning in the business at an
early stage and help the business grow from generation to generation and maintain the
successful stage.
● It is aimed to assist the Professionals as well as the Business owners to understand the
criticality of succession planning and how to create the strategies for better business
continuity planning.
● This book has been prepared for easy understanding of the succession strategies and
step wise approach to understand the implementation of succession. To cater the most
complicated question about when & how to start planning for succession, the book is
divided into a 5 step approach which makes things easier to implement even for a
non-expert. It also contains the Checklists and Practical case studies to understand the
practical aspects to it. It also gives the basic Human Resource planning approach and
assessment tools.
● This book at the last of its part discusses Estate planning which includes The Indian
Succession Act, Hindu Succession Act, Shariat law, Private Trust and its laws, also
include the applicability of Income Tax Act in different situations. Creation of Hindu
Undivided family and taxation has also been incorporated in this part only. All the
relevant law has been explained with practical case studies for better understanding.

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 Book Structure

● The book has Eight Parts.

● The first Part provide the base of succession along with the kinds of succession planning
and way to understand the same. This part also consists of the myths and reality about
succession, challenges in the family business management and Lifecycle of the business.

● The second part talks about the Guiding principles and Strategies to handle succession
planning along with the approach to pursue the same. In this part the most important

● topic is 5 step approach to handle the succession and wheel of succession to plan,
manage and see the expectation of the same.

● Part three consist of the Vision of the owner which is the 1st step of the five step
approach. In this part the business owner/professional will take the clarity about the
Vision of the business internally as well as externally and create a better visualization of
the business for long term along with the benefits to all the stake holders.

● The fourth Part talks about the purpose and creation of the Family Constitution. This
part also deals in making the better understanding of the family council, creation of the
constitution, family Fund, Family board creation and their regular meetings. In this part
we have also talked about the tools for family governances.

● The fifth Part focuses on the alignment of the family vision with business and creating a
better bridge so that the values of the family can remain intact along with the growth of

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 the family business. The contingency planning is on important pat of this succession
journey which has been dealt in this part.

● The next part talks on the identification of the successor along with the grooming of the
successor. This consist of the HR strategies along with the readily available tools which
will help to make it happen. This also talks about the Assessment, Management and
Grooming of the successor.

● In the seventh part this book explains about the estate planning and applicability of the
different laws like, Indian Succession Act, Hindu Succession Act, Creation of Private
Trust and its structuring, along with the Income Tax Act and its provision applicable in
different situation. And at the end it is Checklist and formates

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 About the Author:

CA Ravi Mamodiya

Mr. Ravi Mamodiya is a fellow member of the Institute of

Chartered Accountants of India of 2011 Batch and did his
post-graduation form Rajasthan University. Currently he
is a managing Partner of M/s A R Mamodiya & Co.,
Chartered Accountant, Jaipur. In his long career with
Hindustan Zinc, Ernst & Young and later working closely
with many SMEs, he specialized in turnarounds by
providing ground-level solutions.

Through his unorthodox career, he has challenged and transformed the way organizations plan
the organization’s continuity. As you observe him communicate his view on the business
growth, Ravi has earned a reputation for straight talk, logical explanations and effective
organization design.

His book covers all the essential features of business successions. It is an output of interviews
with many prominent lawyers, consultants and business owners across the country. The book is
a result of his observations and learning about business succession, the business ecosystem, and
understanding the importance of creating awareness for a void that is succession beyond
success.

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 BOOK SUMMARY

The term “succession” is either unknown or avoided by many people in business. Why? It
probably means that the business will have to run without them someday. It reminds you
of the fact that ”death” is inevitable. So, how do you ensure that your company is in the
best hands after your retirement or demise? The answer lies in succession planning.

Like a human life cycle, most business owners fail to understand a business life cycle. It
begins with the conception/ideation stage and ends with the exit or retirement phase.
Business owners make the most common mistake by not planning for the exit phase.
They have certain reservations about the entire process because it seems unnecessary
or not meant for them.

Here are the myths and facts around succession planning:

Sr. No. Myths Facts

1) It is meant only for rich It is essential for all

2) It should be thought of only in Life is quite unpredictable and hence, the

old age earlier you plan, the better it is.

3) It is about retirement, and I’m The owner’s retirement is an eventual

not ready to retire
component, but more important is the
development of a timeline, identification
of the key successors, the role
development of those successors, and
how to finance the transition.

4) My legal heirs will handle it It is good to hope that they do, but
unfortunately, many disputes often
happen over money in today's world

5) I have registered my The nominee may not always be the

nominee(s) and they will be the owner of the assets. The owner will be the
beneficiaries of my assets legal heir as per a Will and in absence of a
Will, the transmission of assets happens

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 as per the succession laws

6) I don't need to seek a There is nothing wrong with seeking a

professional opinion
professional opinion. Just like a doctor is
an expert in his, they can guide you to
ensure that estate and succession
planning is done legitimately considering
the nitty-gritty involved.

7) Giving up ownership means It is a long term process of 5-10 years.

giving up control and income Having a succession plan and preparing
will ensure you and your key stakeholders
(employees, clients, family, etc.) enjoy the
process and get the most value out of the
experience.

8) My Family will be integrated Unfortunately, change is constant in

even after my death everyone’s life and dynamics between
families are bound to change after the
death of the family leader.

9) Equal Distribution of Family If all successors are not actively involved

business wealth is fair in the business then an equal division will
not be considered right.

10) The business being taken over Only post-viewing the strengths and
by children will ensure success weaknesses of both the individual taking
over as well as that of the organisation,
one should decide how and what needs
to be passed on to the younger
generation.

11) A succession plan is as simple A will comes into effect primarily after the
as putting together a will death of the testator. While succession
planning helps in deciding what happens
to a person’s property, investments, and
business when the circumstance in life
changes.

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Experts agree that succession planning should begin 10-15 years before retirement. Even
if you believe you will never retire, a succession plan is necessary in case of a
contingency. You can consider succession planning as a life insurance plan for your
business.

Succession planning at the individual, family and business levels include:

● Strategic Planning,

● Continuity Planning

● Human Resources Planning

● Financial Planning,

● Estate Planning, and

● Exit Planning

What does family succession planning include?

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This form of succession planning includes five steps in detail are :

1. Vision
Do you have clarity over your passion, purpose and why?

2. Family Constitution
Does the next generation wish to own and/or operate the business?

3. Aligning the business & family strategies

Does the company’s strategic plan support the family’s vision and values and vice versa?

4. Identifying & Preparing successors and Leadership transition

Which family members will enter the business?

5. Estate Planning
Who will run the business?

What does business succession planning include?

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What does Business Succession Planning include?
1. Vision
Are you clear about the direction you want internally within the organization and
where you want to head externally?
2. Identifying & Preparing Successors for Leadership
Do you want to hand over your business to someone known or to an outsider?
3. Estate Planning
Who will run the business, and how will you ease the transition?

These questions are a checklist of things to consider before the transition begins.
However, how do you know when you have succeeded in the succession
process? It starts with the wheel of succession.

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Wheel of Succession

The Wheel of Succession which is based on the five points elaborated earlier
Before beginning to implement the succession planning process, you need to
know where you currently stand and which direction you need to go. The Wheel
of Succession is an important tool that clarifies these aspects and provides the
starting point of succession.

In the wheel of succession, the circle’s centre starts with “0%”, and the outermost
circle leads to ‘100%’. This circle is divided into different steps/areas for
succession. Take one area at a time, rate yourself from “0 to 100” and see where
you stand in that area.

The wheel below is like the wheel of a car. If some steps remain incomplete, it
wouldn’t form a tyre and your business car would not run. To ensure business
continuity planning, it’s crucial to take the ride in each area from “0 to 100” and
complete the wheel of succession.

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Steps for Succession Planning
Once you’re aware of your position, it’s time to put the succession plan in action. This
5-step journey begins with defining the vision and creating a business plan.

(I) The owner’s vision

This step includes defining the following aspects of the business:

1. Vision
2. Mission
3. Goals
4. The ‘Why’
5. Passion
6. Purpose
7. GPS
8. Clarity, Focus & Results

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(II) Family Constitution

More than 90% of the businesses in India are family-owned. Many of them do not remain
together beyond three generations.

Just as the Indian Constitution lays down the framework that demarcates fundamental
political code, structure, procedures, and duties of government institutions, the Family
Constitution is the framework of governance that perpetuates the growth of the family
business across multiple generations. It enumerates the purpose, core values and goals
of the family and the business.

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Creating a family constitution requires following a step-by-step approach to ensure you
do not miss out on the important details. It necessitates the presence of an internal driver
or champion who passionately leads the process. The steps below can be considered a
checklist that provides much-needed clarity to the members involved in the process.

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(III) Business and Family Alignment

This step is guided by the Three Circle Model (outlined below) which illustrates the
interaction/impact of the family component on the management and ownership of family

businesses. This model determines the interaction and how all three circles meet in the
middle. It includes the following:

The Management circle: It represents the interaction/impact that the management has
on the family and the ownership of the business.

The family circle: This circle determines the interaction/impact that the family has on the
management and ownership of the business.

The ownership circle: This is similar to the management circle and represents the
interaction/impact that the owners have on the family and management of the business.

(IV) Successor Identification and Grooming

Leaders must develop future visions and motivate the organizational members achieve
them. They need to induce their members with confidence and zeal. A classic example of
true leadership can be found in the pages of the Ramayana.
Lord Rama was known for his ability to lead by example and groom many leaders.
However, even after being chosen as the king of Ayodhya, he patiently left kingship for
14 years. He showed true leadership by taking the kingdom towards better growth and

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success of the people. This is represented through the three-step model as illustrated
below:

Assessment” uses instruments and measures by the individual, co-workers, supervisors,

and subordinates for better clarity of the individual’s and others’ perceptions of their
strengths and weaknesses.

Once the assessment is complete, “management” calls for the organization or individual
to create developmental experiences that provide opportunities to learn and apply the
new skills identified in the assessment phase.

The final phase, “grooming,” requires the individual’s organization, supervisor, and
colleagues to provide the tools, resources, and time necessary to devote to the
developmental experiences.

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(V) Ownership Transfer and estate planning

Estate Planning and Succession Planning are often used interchangeably. While
succession planning focuses on the smooth transition of business and management to
the next generation, Estate Planning ensures tax and regulatory efficient generational
transfer of business and wealth ownership

The two types typically include:

1. Intestate succession – one without a will; or

2. Testamentary succession – one with a will

In cases where there is No Will, i.e. Intestate or Non - Testamentary Succession, The
Hindu Succession Act, 1956 prescribes the rules relating to succession applicable to
Hindus, Sikhs, Buddhists, Jains and related communities. It extends to the majority of the
Indians. The Shariat law applies to Muslims specifically for succession within their family.
Then follows the Indian Succession Act 1925 which applies to Christians and other
persons not covered by the Hindu Succession Act 1956 and the Shariat Law.

Consequently, where there is a Will, i.e. Testamentary Succession, The Indian Succession
Act 1925 applies to Hindus, Sikhs, Buddhists, Jains, Christians, Parsis, etc. Again, the
Shariat Law is distinct here for Muslims.

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Similar to the taboo behind succession planning, a likewise trend is evident with drafting
a will. It is often considered a document that should be discussed only after a certain old
age. Furthermore, the mechanics to draft the same is rooted in this belief and used as a
reason not to draft a will. Some of the myths and facts around this are listed below:

Myths Reality

A Will must be drafted on a Stamp It can be handwritten on a Plain Paper

Paper

There is a Legal Format for a Will There is No Legal Format

A Will once made cannot be changed A Will can be changed any number of
or altered times

A Will effective during a person’s Will takes effect only after a person’s
lifetime death

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Will cannot exclude near relatives Can bequeath everything to Charity/
Servants/Friends excluding the spouse,
kids, etc.

Does not require to be Dated Last Will prevails. Hence, specifying a

date is mandatory.

Nomination prevails over Will Will prevails over the nomination

Married Women cannot make Wills All Women can make Wills

No Witnesses are Required At Least Two Witnesses are required

Additionally, estate planning through the settlement of a Private Trust is a relatively

feasible alternative to address the shortcomings of a Will. It enables a transition of assets
for intended beneficiaries with adequate checks and balances. Further the said Trust is
typically registered with the Registrar and Assurance Department of State.

Unlike a Will, Trust registration does not require a probate process, thereby leaving no
room for dispute with any aggrieved party. However, the creation of Trust under the
current scenario needs careful evaluation to avoid unintended tax and regulatory
implications.

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Email Id: caravimamodiya@gmail.com; Mobile No: +91-9828091785
To conclude:

The fastest way to kill a business is through a lack of succession planning. The
company that began as your dream deserves to continue for generations.
However, that is possible only by planning ahead of time.

If you’re wondering, “where do I begin?” the answer is by acknowledging the

need for succession planning and acting on it. This book, Succession Beyond
Success, is a guiding light or a blueprint for you, a business owner, to continue
your legacy. It answers the most common question about this process and leads
you on the path to success.

Keep Reading, Keep Learning, Keep Sharing!!!

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 CHECKLISTS

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