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Business succession is a way of drawing a roadmap of what direction an existing business will take after the current owner steps down or passes away.
According to Paul Reynolds, Wealth Manager at Globaleye, while a will is a written document regarding your specific wishes on death, succession planning goes a step further in discussing more details. ''It involves separate agreements between business owners, trust planning for offshore protection, and life insurance to provide cash at the right time when and if it is needed,'' says Reynolds.
Succession planning involves essential tools. A buy-sell agreement, also known as a buyout agreement, is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies, is forced to leave the business, or chooses to leave the business.
A management buyout is a form of acquisition where a company's existing managers acquire a large part or all of the company from either the parent company or from the private owners.
Succession planning is not very popular in the UAE, but is becoming more so, says Wayne Hempson-Putt, Vice President at Globaleye. ''Many second generation Emirati family businesses are now actively identifying their future leaders both from within their family, or as more and more go public (IPO), they look either within or reach outside the organization.''
• Buy-sell agreements done between co-owners
• Preserving family assets goal for establishing trusts
• Succession planning becoming popular in the UAE
Source: S. Dhar, Special to Classifieds, gulfnews.com
The writer is a freelancer