In the face of an uncertain economic climate, planning for the future is vital to business sustainability. This is especially so for doctors who spend the bulk of their time helping patients and often tend to neglect the important step of succession planning. Delaying succession planning until the last minute is a prescription for trouble and could result in problems for the practice and the families.
Business succession planning is a simple yet often overlooked step of planning for the business to continue upon departure of any one of the business owner. Business succession planning ensures that their families get the fair value of the practice, and also ensures that the remaining working partners/ shareholders can continue the practice without any interruption.
Regardless of the type of business setup, establishing a succession plan is absolutely necessary. It is important to have a contractual business succession plan agreed on by all the doctors, and the structure of the plan will depend on the type of practice involved. The succession plan should provide for both ownership transfer and management continuation in the event of disability, death or retirement.
A contractual business succession plan will offset the major disadvantages associated with the different types of business setup and it provides the following benefits to the various parties involved in these scenarios:
- ensure that he or his family receives the fair value of his shares in the business that he has invested in over the years; and
- ensure that there is a ready buyer with the necessary funds to buy over his shares in the business.
- ensure that “retiring” owner’s interest will not be sold to third party; and
- ensure that there are ready funds to purchase the interest of the “retiring” owner.
- enable the practice to continue without any disruption; and
- enhance the confidence of the staff and the patients.
With a business succession plan in place, a “win-win-win” situation is created for the “retiring” owner, the “remaining” owner and also, the practice. A detailed succession plan, crafted in advance and with the advice of a financial planner can help preserve and enhance the value of the practice, as well as reduce unnecessary legal and financial issues that can arise during transition of ownership.
At Summit Planners, we have the right expertise and experience in helping medical practitioners such as yourself to achieve your desired financial goals through our comprehensive suite of business and personal solutions.
Speak with us at (65) 9669 7574 or visit www.summitplanners.com to find out more.
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