In our video above, Partner Tanya Dobeli talks to succession planning and what to consider when exiting a business.
A transcript of the video is below:
What is succession planning?
Succession planning allows for the existing owner to transition the business from themselves to a new owner whilst at the same time maintaining the performance of the business.
It is essentially a road map to help plan the different components of the transition.
What point should I start to think about exiting the business?
It is best to start planning the transition early. Ideally you would look at 3-5 years for the transition so there is plenty of time to help smooth the transition and for the current owner to help the business meet its future needs. There is often a lot of knowledge that needs to be shared and that can take time depending on who the successor is.
Who is a potential successor?
The potential successor could be a family member, an internal employee or an external purchaser. With generational transitioning there is often a skills gap unless the person is already working in the business. Identifying key internal people within the organisation with make the transition successful as they will be able to support and mentor others during the time.
What do you want to achieve by selling your business?
When selling a business one of the first things to determine from the current owner is what they want to achieve when exiting their business. Often a lot of time and energy has been spent by the owner developing and growing their business so it is important that the right person takes over and the right value is assigned to the business.
What are the taxation implications of selling a business?
When selling a business there will likely be taxation implications due to the value created within the business. It is crucial you plan this part of the succession with your Accountant so the best tax outcome is achieved. There will likely be Capital Gains Tax, however there are some small business CGT concessions available to some businesses. In addition to this, we also must consider transfer duty, GST, sale of trading stock and plant & equipment. Also depending on the current structure of your business will depend on whether you sell the shares in the business or the business assets themselves.
If you would like further information on, or assistance with considering succession planning in your business, please contact your Hall Chadwick QLD advisor.