What is a business succession plan?
A business succession plan is a plan that details how a business will transition its leadership and ownership when the current owners and/or directors retire, sell the business, or otherwise leave the business. In California, certain laws dictate what must be included in a succession plan, including who will take over the ownership, who will lead the business, and how the assets of the business will be divided. For example, under California Corporate Code section 25101, a plan must be in place to ensure that the interests of all parties involved in the succession - from the retiring owners to the new owners - are addressed and managed appropriately. A business succession plan can also provide for the consideration of any tax liabilities associated with ownership transfers. It is especially important for businesses with multiple owners to have a clear, well-defined succession plan that takes into account the needs of each owner. By establishing a succession plan, a business can ensure that the leadership of the business will remain in qualified and capable hands with minimal disruption.
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