There are a lot of bases to cover in developing an effective and comprehensive succession plan. To help you address important considerations and contingencies, and as part of a broader discussion of succession planning, the HBK Dealership Industry Group developed, “Ten Steps to Effective Succession Planning.” This article completes the series with steps eight through ten. Step 8: Develop an implementation strategy Just as there are many parts to a comprehensive succession plan, there are many areas of expertise required to develop and implement an effective plan. Given our background in the industry and succession planning, and with the support of the HBK network of hundreds of professionals in all financial disciplines, we cover most aspects of the plan, coordinating with an attorney to ensure legal issues are addressed. The importance of a team coordinator cannot be over emphasized, one who is experienced in the dealership industry and succession planning and is a trusted advisor to the owner. The coordinator will quarterback the team, oversee all initiatives and communicate with the owner as decisions are made and the implementation strategy is developed. The use of written reports and memos to document the process and lay out the plan, step by step, is helpful in communicating with all interested parties. These reports can be used to:
- List all critical data relative to the client and the business.
- Reiterate client goals and objectives for the plan.
- Communicate all planning decisions and recommendations: what precisely is it that the plan is going to accomplish.
- Provide the action plan for implementation.
- Detail the implementation team’s analyses and findings.
- Improve the dealer’s understanding of the plan and its impact.
- Provide a launching pad for implementation, that is, the detail of how we’ll proceed.
- Periodically review the owner’s will to ensure dealership assets are transferred in accordance with his or her wishes in the event of an untimely death.
- Determine the family’s liquidity needs in the event of death or disability.
- Identify prospective interim managers if the contingency plan is to wait until a child or other successor is capable of assuming management responsibilities.
- If there are multiple successors, consider buy-sell agreements to address ownership succession in the event of an owner’s death.
- Purchase disability insurance where there are multiple owners to resolve any dispute over disability. The amount of the disability benefits are often less important than having the ability to use the insurance company as a third-party to determine whether one of the partners is disabled. If the insurer will pay the disability claim, then the insured is considered disabled for purposes of ongoing management.
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