I wanted to share some recent insights from my colleague Susan Wood, Director of Wealth Strategies, CIBC Private Wealth that I thought you’d find interesting. Recently, Ms. Wood outlined key considerations on how to prepare to pass down your business to the next generation.

As a successful business owner, you know that business succession planning is essential to your overall wealth management. It will also help you answer critical questions about how your business will transition when the current management and owners are no longer there.

Create a plan

Once you've started to think about who will take over your business and what that might entail, the next step is to create a succession plan.

According to Ms. Wood, in some cases, leadership and ownership will transition to the same person, but not always. Here are some different options that can be considered.

Owner-manager model

The business leadership and ownership is transitioned to one or more children. The family believes that to be an owner, you must work in the business.

Owner-investor model

Ownership of the business is transitioned to the children, but they don’t take an active leadership or management role in the business. Rather, they hire external managers to run the company.

Hybrid model

Ownership is transitioned to a mix of children, one or more of whom work in the business and others who do not. The ownership can also include non-family members.

Assemble a team of multidisciplinary advisors

A multidisciplinary team of collaborative experts can contribute to the success of your business transition.

Your team might include lawyers, family enterprise specialists, accountants, tax specialists, and financial advisors, like ourselves. Get advice you can count on from professionals to help you make important decisions about your succession plan.

Consider your financial needs

Even if you're not ready to retire, you can start thinking about what your financial needs might look like in retirement.

If you need to continue drawing a salary or dividends to sustain your needs in retirement, can the business financially support you and your children? It’s important to be realistic about how many family members your business can continue to financially support. In some cases, a business owner’s ongoing need for cash flow from the business to fund their retirement can influence or potentially limit their succession planning choices, making it an important consideration.

Keep estate planning in mind

It's important to consider how your business succession plan fits into your broader estate planning. I often remind clients of the importance of having a legally binding will and a power of attorney for property. If you have children who won’t be involved as owners in the business, think about any other assets you may want to gift to them as a form of equalization, if that is important to you.

It’s important for us to revisit all these documents regularly and confirm whether they accurately reflect your current wishes regarding transition of ownership of your business and other assets.

If you’d like to discuss business transition planning further or have questions about your investment portfolio, please reach out to me anytime.

Regards,

Allen Murphy, CIM |Investment Advisor, Portfolio Manager | CIBC Wood Gundy
123 Commerce Valley Drive East, Suite 100, Thornhill, ON L3T 7W8 | Tel: 905 762-2229 | Fax: 905-762-2301 | Toll:1-800-668-3800 | allen.murphy@cibc.ca

Maggie Seni| Client Associate | CIBC Wood Gundy
100 – 123 Commerce Valley Dr E, Thornhill, ON L3T 7W8| Tel: 905-762-2261 | Fax: 905-762-2301 | Maggie.seni@cibc.com

Andrea Doria, BCom| Client Associate | CIBC Wood Gundy
100 – 123 Commerce Valley Dr E, Thornhill, ON L3T 7W8| Tel: 905-762-2245 | Fax: 905-762-2301 | andrea.doria@cibc.com