information gathering
This starts everything off. Most information in this segment as well as those that follow can be downloaded using our Information Sheet that can be found on the getting started page. Basic data needed are:
Existing Succession Planning documents including Buy/Sell Agreements, consulting agreements, management succession plans in place and related documentation
Financial information (5 years of statements and any interim)
Enterprise minutes or other governing documents that impact succession
Banking, financing and all debt arrangements with documents (especially personal guarantees).
Approx. 30 days
analysis
Complete financial analysis
Internal Stakeholders: Senior management, key employees, family members, employment contracts, life insurance, phantom stock agreements, options, SARS.
External Stakeholders: significant customers (especially any with over 8-10% of total revenue), debtors, trade suppliers.
Business cycle assessment
Significant risk factors including legal, environment, industry.
Sustainability testing existing succession plan.
Preliminary enterprise valuation. Determine if formal enterprise valuation is required and secure outside resources since this will take some time.
concurrent with information gather
stakeholder
Details of current owners and any plans or timelines to exit.
Deferred compensation plans (if any)
Retirement plan information that will impact the succession plan.
Life insurance or disability insurance plans., especially those related to business continuation.
Stakeholder/owner identity; now and after exit.
approx 60-120 days
reconciliation and preliminary plan
Prepare financial forecast based on analysis. Means test preliminary plan. Assess possible risks of plan (i.e. loss of key employee(s), customers, trade suppliers, or family or other legal challenges).
Plan for other events such as death, disability, divorce.
Draft succession management plan
Draft financial plan for succession
Outline significant financial risks and how they are addressed (i.e. resource planning).
Consult with professionals on plan including accounting, legal, personal planning and insurance professionals.
Draft plan to make necessary changes in banking and finance.
30-45 days after reconciliation
finalize plan
Complete all legals and financial documents.
Finalize all insurance plan
Update timelines and parties responsible for carrying out plan.
Team agrees to metrics that will trigger need for adjustment to plan in the future.
Revisit plan in one year and every year thereafter.