Stewart McKelvey

ing the succession issues somewhat more challenging. Statistics show that more than 60 per cent of owner managed businesses fail to successfully transfer from the first generation to the second generation and 80 per cent to 90 per cent of those fail to succeed to the third generation. Canada is losing an enormous opportunity to not only maintain, but to increase its prosperity and global economic position. Roughly 98 per cent of Canadian businesses are small to medium sized owner managed businesses that employ up to 250 people. If these businesses fail generationally, our country is continuously losing knowledge-base, company equity, and spin-off economic and social benefits. If increasing innovation and closing the prosperity gap are indeed integral to the success of our region and country, then the role of succession planning is more important than previously recognized. Succession planning involves the identification of an appropriate exit strategy for the owner, which addresses the management of the business, the financial situation of the owner and the personal/family concerns of the owner and other family members. The process usually involves working with a succession planning consultant who focuses on fact-finding and family issues rather than on estate and tax planning issues. The consultant's role is to meet with the owner to understand the structure of the business, family members to learn their goals and concerns, and the owner's advisors (such as the corporate lawyer, accountant and banker) to identify potential succession, financing, estate and tax planning issues. The next step is to prepare the succession planning deliverables and review them with the owner and his or her family. Those deliverables should include the following items: • A contingency plan to take effect in the event of an unanticipated death or disability of a key stakeholder. • An issue identification summary that summarizes the issues identified through individual meetings and the consultant's experiences with other families in business which serves as the foundation for a facilitated family discussion. • A family participation plan which provides guidelines and manages expectations for family employment in the business. It is critical for business owners to start planning early. Owners should encourage intergenerational teamwork, involve family and colleagues in their thinking and in the process itself, take advantage of outside advisors, establish a training/ development process for family members, plan for retirement and decide on a retirement date and stick to it. The sooner the process starts, the better the outcome will be. Richard Niedermayer, TEP Partner, Halifax, NS 902.420.3339 rniedermayer@stewartmckelvey.com Doing Business in Atlantic Canada FALL 2013 5

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