Succession Planning Checklist
This checklist serves as an initial review of your succession readiness, based upon several personal factors as well as your positioning across the areas of financial reporting, organization procedures, growth, and management.
We have highlighted in orange commonly accepted leading practices that indicate a high degree of succession readiness – areas where your company may already be strongly positioned. Please note that this exercise requires an honest self-assessment as the other options should not be viewed as a negative but rather will inform where targeted actions may improve your positioning for a successful succession event.
Personal Planning
Do you have a vision for how shareholder succession will look (i.e., timing, type of succession event)?
-
- Yes – Documented, aligned across all shareholders
- Partial – Discussed a vision, but not documented
- No – I am unsure what succession could / should
look like
Do you have a value expectation for your business?
- Yes – I have conducted a regular / recent valuation
- Yes – I have an informal estimate of the business valuation
- No – I am unsure what the business is worth
Do you have a shareholder agreement that has been recently reviewed?
- Yes – It is comprehensive and has been reviewed
- Yes – But I am unsure of its sufficiency
- No – I do not have a shareholder agreement in place
Do you have a fully established estate plan, including personal will and proper tax structuring (e.g., corporate, personal, trusts)?
- Yes – It has been recently reviewed
- Yes – But I am unsure of its sufficiency
- No – I do not have an estate plan in place
Management Team
How reliant is your organization on the main shareholder / key executive?
- Shareholder has a limited operational role
- Shareholder involvement within a key role
- High shareholder involvement / reliance
Does your organization have a developed / experienced management team?
- Yes – Management team is autonomous
- Yes – Management team is very capable and has some decision-making autonomy
- Yes – Management team is capable but has limited decision-making autonomy
- Somewhat – Management has capability gaps and limited decision-making autonomy
- No – Shareholder is the management team
To what extent do you have a formalized employee incentive program based upon company profitability or value?
- Comprehensive incentive program (e.g., ESOP, STIP/LTIP)
- Formalized cash bonus framework
- Informal or ad hoc employee cash bonuses
- No employee incentive program
Financial Reporting
Are your financial statements reviewed externally annually?
- Yes – Audited
- Yes – Reviewed
- Yes – Compilation
- No
How timely is your organization’s month end financial reporting (i.e., how long after the end of the month are statements ready)?
- The following week
- Within 1-2 weeks
- Within 3-4 weeks
- Within 2 months
- Longer than 2 months
- N/A – No monthly reporting
Do you track monthly budget-to-actuals?
- Yes
- No – Do not track
- No – Do not have a budget
Can you segment your gross margin reports by different dimensions (e.g., by product / SKU, product categories, sales channel, customer geography, customer, etc.)?
- Yes – Significant gross margin segmentation
- Yes – Some gross margin segmentation
- Partial – Only sales segmentation, not gross margin
- No – Just aggregate sales and gross margin
Organizational Procedures
To what extent are critical processes and procedures documented?
- Significant documentation
- Some documentation
- Limited documentation
- No documentation
To what extent are critical processes and procedures automated?
- Significant automation
- Some automation
- Limited automation
- No automation
Growth Planning
How has your organization grown over the past three years?
- Strong Growth (7%+)
- Modest Growth (2-7%)
- Stagnant (0-2%)
- Decline (0-10%)
- Significant Decline (10%+)
What level of growth do you expect for your organization over the next three years?
- Better than the last three years
- Same as the last three years
- Worse than the last three years
Do you know what will drive growth at your organization over the next three years?
- Defined and documented initiatives with formal plan
- Defined initiatives, but not formally documented
- No defined initiatives
Learn more about how we support business owners through every stage of transition, visit our Transition & Succession Planning page.
To speak with one of our advisors, contact us at solutions@richter.ca