Have you decided who will look after your business when you retire?

What will happen if one of your partners leaves your business, either voluntarily or involuntarily?

Will your business be sold or will it continue to run after you have left?

And if so, who will your successors be?

Owning your own business can be a very rewarding venture and for most a very large investment. Businesses can exists for many years and when they are owned by two or more partners it is inevitable that at some stage someone will leave the business, for whatever reason.

With so much invested, it makes sense that partners would protect their investments by having appropriate agreements in place to ensure a fair outcome for all partners. But unfortunately it is reported that 95% of businesses may not have the right kind of agreements in place!

This oversight by many business owners can have severe and distressing consequences for not only the owners but also for their families. As human nature has it, we don't always plan for the future, however the best businesses are those which are prepared for all possibilities.

Inevitably, all business partnerships will come to an end at some point in time. It is important for business partners to put a Business Succession Plan in place to ensure the best outcome for all parties in the event that one or more partners were to leave the business.

Put simply, there are two situations a business must prepare for:

i. Voluntary departure of a partner; and
ii. Involuntary departure of a partner

A voluntary departure may be where a partner chooses to leave the business, whether it is due to retirement, a disagreement or another reason. An involuntary departure may occur when one or partners are forced to leave the business due to a critical illness, temporary or permanent disability (TPD) or death.