Risk Report: Business Perpetuation

March 2017

STRATEGIC RISK – A strategic risk due to the impact it has on current and future evaluation of the company.  It could also have an impact on the ability to stay in business due to a catastrophic loss (key employee or owner).


  • Lack of a plan prevents the business from continuing on in the future
  • Lack of a plan also diminishes the value of the organization in the marketplace
  • Creates leadership gap when it’s time to transition the business
  • Loss of potential clients due to uncertainty of doing business with a company with no plan in place
  • If done last minute, creates chaos within the organization


  • Impacts the value of business when sold from 10-40%
  • Only 1.5% of companies survive into the 3rd generation of management
  • Loss of potential customers by average size customer multiplied by those lost
  • Only 40% of American businesses have a succession plan in place
  • 55% of the nation’s CEO’s scheduled to retire in the next 3-4 years have not yet named a replacement


  • Begin discussions around potential candidates for the future and put strategy in place to create a plan in 12 months.
  • Identify business systems, infrastructure, performance management, human capital & leadership and obtain stakeholder engagement to move the process forward.
  • Engage attorney and CPA (CA in Canada) specializing in perpetuation planning.
  • Fund the plan.
  • Develop future leaders through training programs to support their future leadership.


  • Problem: Client was transitioning ownership over a three year period to an outside party and being taxed at the highest level for the transaction.
  • Solution: We worked with the client to restructure the buyout in a more tax favorable manner.
  • Result: This saved the incoming owner over $1,000,000 in taxes over the three year period which allowed them to accelerate the pay-off.
  • Bottom Line Impact: $1,000,000 over three years
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