Business Succession Planning 101: How to Secure Your Company’s Future
If you’re a business owner, you’ve likely poured years of hard work into growing your company. But what happens when it’s time to step away? Without a solid business succession plan, you risk losing the legacy you’ve built, disrupting employees’ livelihoods, and reducing your company’s value.
Business succession planning isn’t just for large corporations it’s crucial for small and medium-sized businesses even more so. Whether you’re looking to sell, transition to family, or explore an Employee Ownership Trust (EOT), a well-structured succession plan ensures a smooth transition and financial stability.
In this guide, we’ll break down the key steps to securing your company’s future.
Why Business Succession Planning is Essential
Many business owners delay succession planning, assuming they have plenty of time. However unexpected events such as health issues, market downturns, or sudden opportunities can force an unplanned exit.
Fact: Canadian Federation of Independent Business (CFIB) reports that only 9% of Canadian business owners have a formal succession plan in place.
A well-executed succession plan:
· Protects your business’s value
· Ensures a smooth leadership transition
· Preserves jobs and company culture
· Helps secure financial stability for you and your family
5 Key Steps to Business Succession Planning
1. Identify Your Succession Goals
Ask yourself:
Do I want to sell to an external buyer, transfer ownership to family, or transition to an Employee Ownership Trust?
What timeline am I working with… 1 year, 5 years, or longer?
What financial security do I need after exiting the business?
Defining these goals early helps shape your transition strategy.
2. Get a Professional Business Valuation
Before selling or transferring ownership, you need to know what your business is worth. A professional valuation provides:
An accurate Fair Market Value of your business
Insights on how to increase value before selling
Credibility when negotiating with buyers or family members
Tip: At Malahat Valuation Group, we specialize in business valuations for succession planning, helping you maximize your company’s worth.
3. Develop a Leadership Transition Plan
If your business relies heavily on you, a sudden departure can be disruptive. To ensure continuity:
Identify key employees or successors who could take on leadership roles.
Provide training and mentorship well in advance.
Gradually delegate responsibilities to ease the transition.
For family businesses, clear succession structures prevent conflicts and misunderstandings.
4. Explore Financing and Tax Implications
Each succession route has financial considerations:
Selling to an external buyer may involve capital gains tax.
Passing the business to family could involve tax deferral strategies.
Transitioning to an Employee Ownership Trust (EOT) allows for a gradual, tax-efficient sale to employees.
Consulting a valuation expert and tax advisor ensures you choose the most profitable and tax-smart strategy.
5. Communicate and Implement Your Plan
A succession plan isn’t just for you—it impacts employees, investors, and clients.
Be transparent about your plans to ensure a smooth transition.
Document everything in a formal succession planning agreement.
Review and update your plan regularly to adapt to business changes.
Pro Tip: The best succession plans start 5-10 years before the intended transition.
Secure Your Business’s Future Today
Business succession planning isn’t just about stepping away it’s about ensuring your business thrives for years to come. Whether you’re selling, passing the business to family, or transitioning to an EOT, planning ahead is key.
Our clients have been asking for help and we have answered. In early 2025 we launched our newest division to address just that our Business Succession Division is headed up by Phil Doublet who works with our valuation clients to help them develop an exit plan on their terms, resulting in more valuable and marketable business which are well prepared for an eventual exit. Want a bidding war for your business, call us today! Best results are achieved with a 2-3 years time horizon.
Malahat Valuation Group specializes in business valuation and real estate appraisals to owners of privately owned companies and their professional advisors.
When owners need to leverage, sell or reorganize their assets, we answer the age-old question "What is it worth?".
We provide our clients and their advisors peace of mind by preparing professional valuations that stand up to scrutiny from lenders, the Courts, and the Canada Revenue Agency.
Malahat Valuation Group Inc.
(250) 929-2929
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