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The Importance of Business Succession Planning

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
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  Article Summary  
Succession planning is one of those things that business owners sometimes put on their back burner, but never get around to really focusing on until succession is literally staring them in the face. However, failing to plan early and adequately for business succession can have serious implications - for both the business entity and the owner.

For starters, it can harm a company’s prospects for long-term survival after the owner leaves the business. It can also make it more difficult for the owner to exit the business on his or her terms and with the financial resources needed for the next stage of life - whether this is retirement, a new business venture or perhaps a charitable or philanthropic endeavor.

This article differentiates between two broad categories - ownership succession and management succession - and identifies related factors. The article also poses five probing questions related to your goals, liquidity needs, management team, potential buyers and post-sale role.

Los Angeles and Southern California CEOs and CFOs should begin succession planning well in advance of the date when the owner plans to exit the business. Failing to do so may severely limit the options available to the owner when it’s time to move on. An outsourced CFO services provider can offer valuable assistance to help ensure that owners’ financial goals are realized in the implementation and execution of the succession plan.

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