SEARCHING
for A successor
By Grant Cameron
those Who Work with business owners on succession plans
say the real secret to ensuring the smooth transfer of ownership
or operation of a company is laying the groundwork well ahead
of time.
The same rule applies whether the planned succession entails
the transfer of a family owned variety store or the sale of a multi-million-dollar conglomerate to a third party.
“There are a variety of options available for planning ownership
transition or succession, but no matter which option you’re going
to pursue, having enough time to make appropriate preparation
is usually the first issue that needs to be addressed,” says David
Wilton, director of small business at Scotiabank and co-author of
the Succession Planning Toolkit for Business Owners, published by
the Canadian Institute of Chartered Accountants.
There’s no getting around it, he says. Succession planning takes
time because there are so many things to think about.
“You need a plan to optimize profits, a plan to identify who to
and when you’re going to transfer management and ownership
responsibilities, and a plan to ensure you have adequate resources
after business ownership.”
For example, Wilton says, if a venture is being sold to manage-
ment or a third party, the owner must figure out a way to maxi-
mize profit by making the company attractive to potential buyers.
Having done that, the owner will then have to conduct a search
and try to find a suitable buyer with pockets deep enough to buy
the business.
Such a process, he says, might take time and will likely entail
advertising for a prospective successor.
However, if the owner is planning to sell the company to someone already working within the business, or if it’s being transferred
to a family member, the priority is to make sure the associate or
successor has the proper skills and ability to take over.
In the case of a family transition, that often means having a
conversation early on with prospective successors to determine
who might be a good fit, he says.
Sometimes, he says, a consultant may need to be brought in to
help the owner of a family business determine who the best fit for
succession is.
“There are lots of succession counsellors out there who work
with families and it can often be invaluable to get the perspective
of a third party as to whether or not an individual is a legitimate
candidate. If they’re not a legitimate candidate, then the third
party can be helpful in terms of having that conversation and de-
ciding what should be done next.”
If a prospective successor is identified but does not have the
skills, Wilton says the owner must evaluate whether the person
