In any type of small business, the idea of succession planning runs the risk of becoming a divisive issue that can ruin relationships, lead to years of legal battles and result in lost customers if not handled correctly. While personal feelings and relationships need to be taken into account, there are a number of legal considerations that decision-makers need to keep top of mind—like who will be named successor, equity or ownership considerations for the remaining executives, potential name changes to the business, the timeline for changes to be made and how to communicate those changes effectively and more. If not handled correctly, these issues can create unnecessary tension and impact business operations.
Michael Rogers, communications officer for the Small Business Association of Michigan, talks with Marc Salach, an attorney with the Bloomfield Hills-based Dawda Mann law firm, to discuss key considerations that both the outgoing executive and remaining leaders should keep top of mind during a succession planning scenario, tips and best practices for successfully handling this type of situation. This ensures that the remaining ownership group stays on the same page and—perhaps more importantly—customers continue to come to the business, and red flags to look out for during the transition period to ensure everything goes smoothly.
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