Phone: 1300 960 373


What is Business Succession?

Business Succession is the process of developing written plans that maintain business viability, manage capital movement, protect equity ownership and ensure employee security when a business has more than one owner and one or more intend to depart or retire. Business succession planning is able to cope with longer term generational change as well as the unexpected and immediate exit of a owner.

When should it be done?

The earlier the better for a business with more than one owner that is worth more than a part owner can afford to loose. It is too late once a trigger event that causes a split occurs. Grief, angst or uncertainty can cause legal advice being sought. Without written documented succession plans, litigation is likely.

Does succession planning apply to all businesses?

No. Any business that is listed on a stock exchange can buy or sell shares at will and the market acts as the succession plan . Any business that is owned solely does not need rules to control business capital.

Full business succession analysis will usually apply when capital value has grown to around $600,000 turning over $2,000,000 and upwards. Not all businesses need or require this level of work.

How does it work?

Every owner has a desire to protect their share of the business value (a owners business capital). When a owner needs to leave immediately the payment schedule, method of valuation, interest , insurance funding, transfer of control of structures etc must be clear and certain. The planning must answer these, and many more, questions.

What is a trigger event?

A trigger event is any issue that will result in an ownership change. This may be marital, financial, health, unprofessional conduct, substance abuse, planned resignation or final retirement.

My business partner and I go back many years, we never argue.

Some reasons for a split can be disability, stroke/trauma, or death. No business can assume all the original owners will be part of the negotiations. Illnesses like depression can strike anyone regardless of age or trustworthiness.

My business partner is my spouse.

Without a set of plans and a binding agreement a spouses capital may be dealt differently in conditions of illness or divorce than the surviving partner can control. Children from a previous relationship (a blended family) can generate complication.

Are you a Legal Firm?

No. I am a business succession specialist. I do the face to face work with clients; fact finding, strategy and tactics as part of a formal Business Succession Report ( BSR ). I work closely with solicitors who have expertise in succession planning and who draft the binding Business Succession Agreement ( BSA ) based on the instructions contained in the BSR that I write.

What are the costs and charges?

The costs will vary significantly because they are based on the disclosure and requirements of each client. BizSuccession Solutions (BizSS) will charge an upfront fee on engagement and a implementation fee that is a written quote paid over 6- 7 months interest free. Legal fees are also quoted in advance. The model used by BizSS takes away cost surprises for our clients.

Does business equity need to be sold out of the family?

No. Often equity in primary industry businesses (farms, fishing trawlers) needs to stay in the family. A BSR will identify issues of management as opposed to shareholding and will allow certainty to the families wishes and intentions. The rules when developed are then drafted as a BSA.

Does the client control the planning outcomes?

Yes. The role of BizSS is to work with clients wishes so that every one of their requirements are addressed within the plan.

Does the BSR adopt a standard format?

No. Just as no two clients have the same intentions neither will the BSR's be similar. Every planning process is tailored to client circumstances.

Can I use my own Lawyers?

Yes. The issue is related to time and costs however. BizSS uses a unique process that panel solicitors are familiar with whereas a clients solicitor will need time to learn this process. This may result in excess legal fees.

What is a Business Succession Report?

It is a written management document which is a tool used to analyse, develop, and plan for a set of business succession specialised components. Part of this report acts as the source of instructions for a legally drafted Business Succession Agreement . Tailored to every separate business circumstance, a BSR is unique to BizSuccession Solutions.

What is a Business Succession Agreement?

It is a legally binding agreement based on instructions embedded in a Business Succession Report and drawing the elements of exit planning strategies, corporate governance and dispute resolution into a cohesive document.

How often do I have to pay to upgrade the BSR and BSA?

We recommend annual reviews for BizSS to check for any changes to values or structures and the equity they control. The BSR will not need to be changed for some years in a typical business. The same applies to the BSA. Incoming owners are required to sign the BSA schedule and are then bound by the agreement.

If I have a BSR do I need another agreement for a new Joint Venture?

Yes. The BSR will cover new owners of your business; but a Joint Venture is a new business in its own right and so are the new partners. The parties in the JV of which your business is but one, will need a BSR to cover everyone.

What information do I need to provide?

In all cases, detail of equity ownership and the structure (companies, Trusts) deeds and constitutions are required. Further documents and supporting information will be asked for during the planning process.

Can I use my own accountant?

Absolutely. Business accountant involvement and input is necessary and client authorisation for full access to this advisor is mandatory for BizSuccession to proceed.

Can I use my own Financial Planner?

Yes. Typically your financial planner will be involved in providing any insurance funding needs and part of the BSR is designed for your financial planners use.

What is a Trust?

Commonly a Discretionary Trust (known as ' family trust '). A Trust is a structure created to hold assets for the benefit of a class of beneficiaries. Distribution to beneficiaries is at the sole discretion of the trustee . Different law applies between Australian States. Family assets are often held in a discretionary Trust, defined by its deed, nominating family members as beneficiaries of the Trust.

What is a Unit Trust?

This is a non discretionary Trust . Distribution of income and assets must be made by the trustee in direct proportion to the units held by the unit owners. A unit Trust may have an external trustee or be written so that all unit owners act as joint trustees.

What is a Testamentary Trust?

A testamentary trust is a trust created by a will. It is generally a discretionary trust – one where the Trustee has full discretion about who benefits, and to what extent, under the trust. The significant advantage of a testamentary trust is that the assets are owned by the trustee, and the benefit of the income and capital of the trust passes to the beneficiaries.

What is the difference between a Unit Trust and Trust?

The discretionary power of the trustee in making distributions.

What is a trustee?

Legal term given to the a holder of property on behalf of a beneficiary. The trustee is named in the Trust deed to make all daily decisions in running the Trust. May be a natural person or a legal entity. State law applies in Australia.

Who can be a trustee?

A trustee is generally held to a 'prudent person' test in carrying out their duties, and may be a friend, business associate, professional advisor or family member.

Will a BSR or BSA assist me with Insurance?

Recommendations made in the BSR and carried through to a BSA will provide minimum benefit levels and specify ownership and purpose of any business insurance. This is of assistance to financial planners and underwriters.

Why use insurance in succession planning?

The end purpose of a BSR is a written set of strategies and immediate actions to ensure an orderly transfer of owners capital. Where such a transfer is caused by an insurable event, it may be possible for insurance to provide upfront cash to satisfy these obligations. Under such circumstances retirement of business debt is also considered.

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Andrew said

Jim pro­vided very sound and practical advice on what to do if one of the busi­ness partners wanted to leave. His Suc­ces­sion Agree­­ment elim­ina­ted any questions as to what would hap­pen and how it would hap­pen. Thanks Jim.