Business Succession: 5 Facts You Need to Know

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Business succession is a measure of the transfer of power and capital from one company to another company, which will continue to carry out the activities of the previous company, even if under a different corporate name.

Although the most popular transition is the family one, it is possible that this negotiation involves other steps, such as equipment, human resources and commercial points.

We have gathered 5 facts that you need to know before starting your company's business succession, check it out!

1. There are several types of business succession
When we talk about business succession, the first thought usually is the transfer of the company from father to son.

However, there are other ways to do this succession:

Family: The most popular, it occurs when ancestors transfer nepal phone number lead ownership of the company to their natural successors or close family members. It can happen through death or a simple contract;
Labor: The successor company receives the labor obligations of the predecessor, taking ownership of its assets. In this scenario, employees do not suffer any consequences and maintain all their rights;
Goodwill: This modality occurs with the acquisition of a commercial point, service, goods or debts from a predecessor company. In this way, there is a transfer of the main part of the activity, maintaining the same business.
It is important to understand the type of business succession as each one has particularities and legal, economic and contractual differences.

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2. The ideal business succession begins well before the partner or owner leaves
Regardless of the type of business succession, it is important that it begins well before the partner or owner leaves.

Many entrepreneurs only think about succession when they decide to leave the company or when something external happens, such as a death, illness or accident.

But the sooner those involved prepare, the smoother this transition will be, both for those in charge and for other employees.

Creating a business succession plan , establishing rules and parameters for this transition is the first step.

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3. The successor must prepare to take over the company
But it is not just the predecessor who needs to be prepared for this change, it is essential that the successor also qualifies himself to take on his new role and new responsibilities.

When business succession is carried out by another company, the transition can be easier, as the successors already have experience with a similar or related business.

When it is a family succession, it is important that the choice of successor is based on professional capabilities and skills and not just on family proximity.

Ideally, the successor should start working with the current manager in charge, to learn about the needs and demands of the business and gradually achieve the highest position in the company.

4. Depending on the agreement, debts are also inherited
It is possible that the successor management will be responsible for civil, labor, tax, administrative, environmental or any other type of obligations .

In other words, the successors may have to assume the payment of debts assumed prior to the transfer if they are properly recorded.

In addition to debts, it is important to find out about:

Contracts: if the contractual documents are agreed upon in the name of the legal entity, the contracting party will be changed. If they are not personal, there is no change.
Credits: the acquiring company obtains the credits and the debtor has the right to settle its debts with the seller or successor.
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5. Business succession planning can help you get through this process in the best possible way.
The success of a succession depends on detailed and structured planning.

To do this, a detailed analysis of the company's corporate structure and financial situation is necessary, in addition to an analysis of the successor's profile and the needs for him to assume leadership. If you need help with business succession, get to know Ignition, our management and strategic planning consultancy .