What is a business succession plan?

A business succession plan is a set of steps and strategies a business owner can take to ensure their business (and its assets) are passed on and managed properly when they decide to retire, become incapacitated, or pass away. This plan is important to ensure that the business continuity and capital value are maintained. The plan is also important for maintaining the profitability and growth of the business. A business succession plan involves identifying successor(s) - this may be a family member, a partner, or an outside investor - and legally transferring ownership, control, and management of the business from the current owner to the successor in a seamless way. Depending on the size of the business, the plan may include taxes, financial arrangements, legal documents, contracts, and other pertinent information. In Texas, the laws governing business succession plans are outlined in the Texas Business Organizations Code. The code outlines the process by which businesses in Texas are to transfer ownership and management, the legal documents required to transfer the business, and the conditions under which an outside investor can become a successor. Additionally, the code outlines the responsibilities of the current owner, successor, and other involved third parties. All parties must abide by these guidelines to ensure the smooth and successful transition of ownership.

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What is a business succession plan?

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