Grant Thornton notes that a good succession plan addresses two key issues: passing on the ownership and management of the company, and minimizing taxes. There are several options as owners consider the best plan for the company but also one that protects their retirement and the financial security of their family. Deloitte lists the following:

 continued ownership and management by the family;

 family ownership with outside management;

 sell to key executives or employees;

 sell to competitors or other outsiders;

 re-organize to sell part and retain part; or

 wind up and liquidate.


One of the strongest messages from the experts is to get outside help. RBC stresses the need for a team of advisors: an accountant, lawyer, tax advisor, appraiser or valuator, banker and a broker - each requiring expertise in the area of small and/or family-owed businesses. They can help determine the value of the business and ways to enhance that in advance of the transition. They can walk through the various legal and tax issues, explaining an estate freeze, ways to minimize probate fees, making a choice between dividends and capital gains, and how to set up a family trust. They can help anticipate and manage family interests. Expand business opportunities and take advantages of new technologies.





Planning a business transition is difficult work. Experts caution that the process could take a minimum of 18 months up to
five or more years. While each company must develop its own succession plan to meet it own needs, and each company is different, there are common elements to any succession planning process:

1 Consult with Stakeholders: Involve family members,
senior managers, shareholders and other stakeholders.

2 Prepare your Company: Know its assets and liabilities
and build value before the transition.

3 Develop your Advisory Team: Hire financial, legal
and business expertise.

4 Put the plan in Writing: Once the decisions have
been made, write them down.

5 Share the Plan: Inform your family and
important stakeholders about the plan.

6 Plan for Contingency: Be prepared for sudden
illness, accident or death.

7 Monitor the Plan: Review the plan regularly
and modify it as circumstances change.

Residential construction companies have accumulated considerable wealth over the past decade. Dr Leon Danco, a respected family – business consultant, assesses the risk of not planning: “If you don’t plan, you’ll have the satisfaction of knowing that it’s the lawyers four limousines back who will be settling your family’s future”.

Family Business Institute:
www.familybusinessinstitute.com

CAFE:
www.cafecanada.ca/programs.cfm

Government of Alberta: Leaving your Small Business:
Your Plan for a Successful Transition:
www.alis.gov.ab.ca

Halogen Software Inc -- eSuccession:
www.halogensoftware.com

Knotia.ca – Succession Planning Toolkit:
www.knotia.ca

Business Development Bank of Canada
– Transition Planning:
www.bdc.ca

Canadian Federation of Independent Business (CFIB) –
Business Succession Planning:
www.cfib.ca

RBC – Business Resources, Business Succession:
www.rbcroyalbank.com

Industry Canada – Managing for Business Success:
www.strategis.ic.gc.ca

PriceWaterhouseCoopers –
Let’s Talk about Succession Planning:
www.pwc.com

Deloitte - Succession Planning:
www.deloitte.com

Grant Thornton – Services for Family Businesses,
Succession Planning:
www.grantthornton.ca

“Perpetuating The Family Business”. John L. Ward.
New York: Palgrave MacMillan, 2004.

Canadian Home Builders' Association - Alberta © 2007


Increase awareness among members of the importance
of Succession/Transition Planning for their companies.

Create a brochure and step-by-step guide on Succession/
Transition Planning.

Develop a seminar and resources on Succession/Transition Planning for delivery in Fall 2007 and Winter 2008 in all Local HBA areas.

Many business owners hope, as they grow older, to accomplish more than just survive. They desire a kind of immortality – to create something significant and strong enough to endure beyond their lifetime. Succession or transition planning opens doors to that goal.
It enables them to pass on to subsequent generations some of the rewards of entrepreneurship – the opportunity to manage capital (stewardship), to make things happen in the community (giving back) and to have a sense of control over one’s destiny (creating a legacy).

Succession or transition planning is part of business management – making decisions around what will happen to the company after retirement. However, implications are just starting to be considered around how succession will be handled by the huge number of small and family-owned Canadian businesses as aging Baby Boomers retire over the next decade: a 2005 CIBC study estimated $1.2 trillion in business assets of family firms to be transferred to the next generation by 2010.

93% of residential building and development firms and 91% of Trade Contracting firms in Alberta in 2006 have less than ten employees. Most are family-owned businesses. Many of the remaining 7-9% that are larger companies started as family-owned businesses. Family businesses represent 65% to 90% of all business in Canada. Less than 70% of these survive the tenure of the founder and only 10% make it to the third generation. While four out of five family-owned businesses are still controlled by their founders, this will change dramatically as an estimated 71% of Baby Boomers retire in the next ten years. CFIB reports that more than half of these have no succession plan and, of those who do have plans, most are unwritten and may not have even been shared with the intended successor.