Do you have a continuation plan in place for your business in the event of your CEO’s untimely or unexpected departure?
MassMutual’s Ryan Hill, AIF, retirement plan specialist, answers questions about why it is crucial to have a strong plan in place now to ensure your company keeps running smoothly!
Q: What is a continuation plan?
A: Continuation planning requires taking time to ensure your business will continue after your retirement, death, or disability. Some notable items to include: a mutually agreeable sale price, preservation of the business’ value, and an orderly transfer of the operation, management, and ownership of the company. Focusing on providing stability for your clients, employees, creditors, and investors will create a smoother transition for everyone involved. The key is to have a continuation plan in place before a crisis!
Q: Why is it essential to have a continuation plan in place?
A: Having a written continuation plan can keep a business going and help prevent conflicts among remaining owners or the previous owner’s family, legal action, delays in business growth, and loss of customers or business value. The lack of a plan could also cause the liquidation of a company, which may bring in less than the full market value.
Q: How do you begin setting up a plan?
A: It’s similar to having a will and estate plan for a family. The easiest way to begin is to have a conversation about the future desires of the owner(s). These conversations should include: the owner’s exit timeline, business valuation (with and without current owner present), income and estate tax impact, identifying key employees, and assessing if family or business partners involved want to continue the business.
Nextep’s retirement team is here to help you make long-term plans that best fit your personal and business goals! To learn more about starting a continuation plan, contact 401k@nextep.com.
