A STEP BY STEP GUIDE TO PRIVATE BUSINESS TRANSITION

Transitioning out of a business can be difficult, emotional complex. Financial and management issues are not the only factors to consider. Whether to sell outright or transfer to a family member or employees, how to gain the best value from the business, and how to ensure a fully funded retirement for the owner are just a few of the questions that impact decision making. The four keys to unlocking the door to successful business and wealth transition are continuity, contingency, financial security and legacy planning, says Rob McGavin, managing director of financial planning and insurance advisory with Scotia Wealth Management. “Continuity planning, or Plan A, means continuing to create wealth and value within the business, preparing for a successful transition, and addressing future dynamics of the key stakeholders — especially when family members are involved,” he says. “Plan B — the contingency plan— is about being prepared for the unexpected, such as a shareholder exiting the business, the loss of critical team members, or significant changes to family circumstances.” For many owners, a big part of their retirement income comes from transitioning business. Looking at tax-efficient structures and how to benefit from the wealth that has been built into the business is critical in ensuring financial security and a comfortable life post-transition, says McGavin. “Estate planning and legacy means determining how to dis- tribute wealth between family members inside and outside of the business,” he adds. “Often owners struggle with how to treat each person fairly, while recognizing that not everyone will get an equal share.” Before, during and after transition there are important steps that must be taken, he says: First, start early by talking with your Scotia Wealth Management relationship manager about both your business and personal goals. Second, develop an integrated plan to achieve those goals. This will involve a number of stakeholders. The key is communication with familymembers, the management team and others about their future role in the business. Third, revisit the plan regularly with your Scotia Wealth Management relationship manager. Life and business circumstances change. It is imperative that the plan remain fluid and up-to-date. As life changes post-transition, ensure that estate and legacy planning are adjusted to ensure things unfold as intended. Scotia Wealth Management specialists can help business owners to manage the intricacies of the transition process. An integrated approach to planning that encompasses business, family and ownership can help minimize conflict, maximize value, and provide a retirement deserving of the hard work that went before. Thoughtful and effective business transition planning can help ensure a successful transition.