Succession Planning 101 – Steps 8 through 10 – Implement But Be Flexible (Print PDF – All 4 Parts)
In my previous three posts, I discussed why business owners need to engage in succession planning (aka exit planning), listed ten steps as an overview of the planning process, and covered the first seven steps in detail.
After completing steps 1 through 7, you will have assembled your professional team, defined your personal financial objectives and timeline, determined at least an approximate value for your business, identified your desired successor, and developed and evaluated possible succession plan structures.
After all that, it is finally time for you to begin to implement your succession plan.
Step 8: If You Have a Good Fit, Further Develop the Plan, Including the Timeline and Methods for Building and Protecting the Value of the Business and for Transferring the Business to the Successor
If your personal financial objectives and desired exit timeline, approximate value of your business, and your desired successor all match up well, then it is time for you to further develop your plan. This should include a targeted timeline for beginning to implement your plan and for completion of your plan. It should also include the development of methods for building and protecting the value of your business and for transferring the business to a successor.
Examples of further plan development here might include (1) determining whether/when to begin to transfer minority ownership interests to designated family member successors or key employee successors; (2) ensuring that critical business functions can be handled by one or more key employees and that the business’ success and survival are not overly dependent on your involvement; (3) protecting the value of the business through confidentiality, non-competition, or stay bonus agreements with key employees; or (4) developing a timeline for a sale to an outside third party and possibly identifying a business broker or investment banking firm to engage for assistance with marketing the business for sale.
Step 9: If You Do Not Have a Good Fit, Go Back to Step 2 (or Step 4) and Start Over
Sometimes one or more of your personal financial objectives, desired timeline, approximate value of your business, and desired successor do not match up well.
Maybe your plan has always been to have one or more of your kids take over the business, but after going through Steps 1 through 7 you now realize that none of your kids really want to take over the family business. Or maybe they do want to but you now realize they don’t really have what it takes to manage the business successfully.
Or perhaps you were hoping to sell the business to a third party for $5 million but your professional valuation report is telling you the business is only worth $2.5 million, and that amount will not meet your personal financial objectives.
Whatever the reason, if the path you thought you were headed down is clearly not going to work, it is important that you not waste valuable time pursuing that path any further. Instead, it is time to go back to Step 2 (or Step 4) and start over because you will need to change one or more aspects of your plan. You may need to do one or more of the following: adjust your personal financial objectives; adjust your timeline; change your desired successor; or find a way to increase the value of your business.
Step 10: Once Your Plan is Developed, Implement It (But Be Prepared to Be Flexible and to Revisit the Plan Over Time As Necessary)
But, life and business often do not go according to plan. It may be a downturn in the economy, or a change in your industry, or a health issue for you or your successor, but the odds are good that your succession plan will encounter unexpected obstacles.
So, as your plan unfolds you must continue to review and revisit the plan to be sure it continues to meet your objectives and you must be prepared to be flexible and adapt the plan to changing circumstances.
Click on Succession Planning 101 – If You Plan to Succeed, You Need a Succession Plan for a downloadable PDF summary of the succession planning blogs.
Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation.[/vc_column_text][/vc_column][/vc_row]
Are you ready for the new Michigan Paid Medical Leave Act? Did you know there was such a thing? After much political wrangling, the current version of this law is scheduled to take effect on April 1. Under it, many Michigan employers will be required to provide paid sick time for their workers. Keep reading for an overview of the new law and what it requires.
The law began with a ballot initiative. Michigan voters were posed to give themselves a generous helping of paid sick time, so the Michigan Legislature intervened and passed the law themselves, thus taking it off the ballot and allowing time to delay the effective date. This gave us the Michigan Earned Sick Time Act—which never became effective. In the final weeks of 2018, the Republican-controlled legislature passed a series of amendments, including re-naming the law the Michigan Paid Medical Leave Act. Lame duck governor Rick Snyder signed the amended version into law shortly before his Democratic successor Gretchen Whitmer came into office.
The politics of sick leave
The first thing to understand about this law is that the political battle rages. Some activists feel the legislature “stole” their ballot initiative and watered it down. Movements are afoot to bring a new ballot initiative. There is also talk of court challenges, and with divided government in Michigan, it’s hard to predict where this issue will ultimately land. But for now, employers have to prepare themselves and be ready to honor the new requirements that come into play April 1.
The next thing to understand is that it currently only applies to employers with 50 or more employees. This was one of the biggest amendments in December, as the original version applied in some form to almost all employers. If you don’t employ at least 50 workers in Michigan, you are spared from this law—at least for now.
For those employers covered by the Act, you must provide your workers with one hour of paid sick time for every 35 hours worked, up to a maximum of one hour per week and a maximum of 40 hours per year.
The benefit does carry over from year-to-year, but you are not required to allow employees to use any more than 40 hours in a given year. The law also includes some detailed definitions surrounding what types of health issues, family health needs, and domestic violence concerns qualify for paid time off under the Act. Be on the lookout for a poster published by the State of Michigan (not yet available) that employers will be required to post.
Strategies for Compliance
The law expressly allows you to “front load” the 40-hour benefit at the beginning of a year and permits reliance on a standard paid time off policy to satisfy the requirements of the Michigan Paid Medical Leave Act, so long as the benefit and eligibility rules are at least as generous.
For many employers, it may be possible to make modest tweaks to your current policy and bring it into compliance with this new law. For others, providing this benefit will represent a major change. You should consult with your legal and HR advisors to determine what works for your organization. Even for Indiana employers or small businesses in Michigan that do not fall under this law, it is important to stay tuned to changes in sick leave rules so that you are offering competitive benefits for your workers.
Whether your business is domiciled in Michigan or Indiana, your employee benefits manual should be reviewed annually, and updated as needed. If you have questions about being in compliance in either state, please call Employment Law Attorney, Michael Hays at 574.232.3538.
Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation.