Interim succession planning: what’s your business’ immediate plan to continue operating when a key owner, manager or director can no longer function or dies unexpectedly? Setting up interim succession planning to keep the business afloat while your succession plan kicks in doesn’t have to be complicated, but it does have to be in place and made known to all managers and interested owners. This way when the emergency hits and you or your key partner are unable to continue running the business, the plan is ready, and everyone knows what to do.
Otherwise the surviving owners may not be able to make the critical and timely decisions necessary to continue operating, because no one knows who has authority to make those decisions. Similarly, whomever decides to “take charge” may not have the legal authority to make critical decisions on things like spending company money, signing legal documents, or even issuing payroll checks on payday.
A well drafted interim succession plan will cover all these instances. It will appoint a key person or persons to take over day to day operations. It will give them the authority they need to make longer term decisions if necessary. For example, in the case of the death of a majority owner, someone should be able to bind the business to a sale to a new purchaser without having to go through a long probate process.
The loss of a key owner or manager can devalue the business to a subsequent purchaser, because a driving force for the business’ success is no longer present. In the time between the loss of the key person, and a subsequent sale of the business to a new owner, the business may lose revenue, customers, and goodwill with potential customers.
Contact me if you have any questions on business transactions. In western North Carolina, Asheville, Waynesville, Hendersonville at (312) 671-6453.
Email me at: palermo@palermolaw.com.
Be sure to check out my other blog posts HERE. Be sure to listen to my podcasts with Matt Mittan at BizRadio.US