Equity & Succession Planning

Equity & Succession Planning

For You and Your Business

When we are in business, we can spend most of our time working in our businesses and little time working on our businesses.

Planning for you personally and your business should include equity and succession issues.

Equity and succession planning covers matters including bringing a new "partner" in to your business; you or a business "partner" exiting your business (by sale, death or disability); and the sale of your business. It is also relevant to insurances; superannuation and financing of your business and personal matters such as your Will.

The keys to good equity and succession planning are communication documentation and forward thinking. Remember the Boy Scout motto "Be Prepared".


Any successful business requires good communication between business owners and their personnel, customers, suppliers and professional advisers.

Anticipating and agreeing how situations will be handled if they arise will reduce the risk of conflict and dispute later and provide mechanisms for resolution of disputes.


Businesses should document everything relevant to the business.

The relationships between business owners; the business and its employees, contractors, customers, suppliers, lenders and others should all be agreed and put in writing.

Practices and procedures concerning your business (employment, occupational health and safety, manufacturing processes etc) should be documented.

Records of assets, leases, liabilities, insurances, borrowings, debtors, creditors, supply agreements, customer contracts etc should be maintained.

Your professional advisers can assist you with the negotiation and preparation of such documentation.


*Structure - ensure you understand the structure of your business (company, trust, partnership, sole trader) and that it suits your purposes.

*Documentation - record in writing the relationship between you and your "business" partners. This can be done by a partnership agreement, shareholders agreement or joint venture agreement. Such documents should include valuations provisions (how to determine the value of the business ) and "pre-emptive rights" provisions (i.e. procedures for existing "business" partners to be able to buy out the interest of another partner in defined circumstances and a mechanism for third parties to be able to join and become owners of the business).

*Ownership - clearly record what is owned by your business. This notes the assets of the business and affect its value.

*Confidentiality - protect your business' confidential information by having confidentiality provisions or agreements with employees, contractors, customers, suppliers, potential investors and potential purchasers.

*Intellectual Property - business and company names, logos, brand names, practices and procedure are all intellectual property and valuable assets of your business. Consider protecting them by registration - as a business name, company name, trade mark, patent or design.


*Structure - check with your accountant as to the most tax effective way to structure your business.

*Capital Gains Tax- when selling a business or shares in a company which owns a business, obtain advice on any CGT implications of the transaction.

*Stamp Duty - this is payable on various transactions including the purchase of shares in companies.

*GST - check whether GST is payable on the purchase price. There are requirements of the sale of a business as a 'going concern' to make the sale exempt from GST.


*Superannuation - seek advice on how you should structure superannuation matters for you your staff and your business. Remember that this is not your core business and may be best placed in the hands of a professional superannuation trustee or fund.

*Insurances - there is a wide range of insurances which may be necessary or desirable in the operation of your business and personal affairs. These include insurance on you (whole of life, death, total and permanent disability, income protection, trauma) and your business (plant and equipment, buildings, assets, fire, public liability, business expenses, directors and officers liability). Such insurances should be checked when a business "partner" enters or exits the business.

*Business Financing- where business "partners" are coming in to or exiting a business, the business' financing and leasing arrangements must be considered. Exiting parties will want to be released from any security (mortgage, guarantee) for borrowings or leasing of equipment or land which they have provided and any monies lent to the business repaid. Incoming parties may be required to provide security for borrowings or leases.


*Funding - the exit or entry of a business "partner" will require an assessment of the funding requirements of that transaction and the future capital requirements of the business.

*Personnel- any changes of operator in a business are always disruptive and need to be carefully managed. If you are the business operator looking to exit or allow a new person to become involved in your business, do not underestimate the emotional adjustments which you will have to make in doing this. You and the dynamics and culture of your business will be affected by this.

It is important to obtain legal financial and accounting advice and work with your professional advisers to best organize equity and succession planning matters for you and your business.

If you would like further information on equity and succession planning for you and/or your business, please contact us. We can also provide you with other articles and materials to assist you with this.
We are happy to work with you and your other professional advisers to enable you (when appropriate) to grow your business and exit your business in an orderly fashion.


This article is general in nature and for information only. It should not be acted upon without obtaining specific legal advice.

Content provided by Anne Hodgson & Co Lawyers

About Anne Hodgson & Co Lawyers

Anne Hodgson & Co Lawyers provides quality, timely and cost effective legal services for businesses and individuals.

Anne Hodgson has worked and been a Partner in two sizeable Melbourne CBD legal practices before establishing this firm. She has significant experience in commercial and business legal matters and in assisting clients with their personal legal matters. This firm offers clients quality legal services at a convenient location and at significantly lower rates than those charged by CBD firms. They also ensure that you receive prompt 'hands on' attention from Anne and staff.

This firm operates from purpose built premises at 81 Miller St, Carnegie in Victoria. Office hours are 9am to 5pm Monday to Friday. Appointments can also be arranged outside work hours at their office or at client's premises.



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