Nobody wants to talk about death, disability or divorce.
These are three life events that can impact your plans and the future of the business you own.
In fact these are the three events most people think of when the subject of succession planning or buy/sell agreements is raised.
But, as I said, nobody wants to talk about these possible events.
So, let's talk about something else.
Let's talk about the other events that could affect your business ownership, your future, your family, your business partners and the continuity of the business itself.
All of these are at risk if you don't write and fund a comprehensive succession plan or buy/sell agreement.
The first thing you need to understand is that these events - the ones people tend to overlook - are far more likely to be the reason you need a succession plan than death, disability or divorce.
Without a succession plan, these things could grow from hiccups in the firm's growth to catastrophes.
What are the events people tend to overlook when thinking about succession planning? They are:

• Retirement.
  Everyone wants to retire some day.
  A succession plan outlines how this will happen, how ownership will be sold or transferred to a successor, how the successor will be chosen, and how the buy-out will be funded.
  
• Early retirement.
  The decision to retire early can create several challenges.
  For the business it could mean a successor has not been adequately trained and acclimated to the operations and the culture of the company.
  For partners it could mean inadequate funding to buy out your ownership share earlier than anticipated.
  This should be addressed in a succession plan or a buy/sell agreement.
  
• Inability to agree on critical business matters.
  This is a leading cause of business ownership changes.
  In particular, it is frequently the case that partners cannot agree on the future direction of the company.
  In this event, one partner decides to leave the firm.
  Without a written succession plan or buy-sell agreement, no agreement on how to value the company, and no understanding how the remaining partner(s) will find the money to buy out the departing partner, a partner leaving can also create several problems for the future stability of the business, including inability to borrow money, loss of key employees, under-capitalization, and loss of clients or customers.
  
• One partner does something illegal (or unethical).
  Without a succession plan, the other partner(s) have no way to force the issue of the offending partner departing the firm.
  Further, there is no understanding of the basis for valuation of the company or terms for purchase of the partner's share.
  In addition, there is no basis for paying the offending partner a smaller amount of money for his or her share of the company to compensate for damage to the company's reputation.
  
• One partner has personal credit issues.
  This situation can, of course, impact the company's ability to borrow money, it could justify a lender in calling an existing loan or it could result in new terms from vendors.
  Absent a succession plan, it could be difficult to push a partner to depart the business.
  
• The company wants to borrow money.
  If one or two partners, although still a minority, believe the company should not borrow money and the other partners want to take a loan for expansion, without some document - preferably a partnership agreement, buy/sell agreement or succession plan - the partners might not be able to borrow.
  
• The firm wants to bring in new partners.
  The partnership agreement should also outline theconditions under which new partners can join a firm or under which employees can become partners.
  It should state the qualifications for partnership and the requirements and expectations of partners.
  It should include whether they will buy in or not.
  Without a written partnership agreement, the firm cannot bring in new partners or they cannot bring in a new partner without unanimous agreement of current partners.
  
• One partner needs to get money out of the partnership for personal financial need.
  In this situation, if the firm does not have the cash reserves to loan or advance to the partner, the partner with special need might be compelled to sell his/her interest in the firm in order to get the needed cash for medical expenses, etc.
  This could be catastrophic for the firm if there is no provision for a partner leaving and the company or the partners buying out his or her share of the firm.
  A succession plan, buy/sell agreement or even the partnership agreement should address this possibility.
  If there was no departure funding, the firm could find it necessary to borrow money or, if this is not possible, selling the firm to fund the exit of the partner with a personal financial need.
  
• Boredom/desire to try something new.
  Some people get a big thrill from starting a company and seeing it become stable.
  Once this has happened, they become bored and want to move on to a new challenge.
  Whether you start a company with someone like this or one of the partners experiences a mid-life crisis and needs to do something new, without a succession plan or buy/sell agreement, there is no clear way out.
  There is also no consensus about how to value the company.
  
• Family needs.
  There are often family circumstances that could cause a partner to leave the firm in order to remain at home to care for a sick child or spouse or to care for aging parents.
  The firm might not be able to sustain customer/client service without that partner or without replacing that partner.
  An extended leave of absence might not be feasible.
  Without a buy/sell agreement or succession plan and without funding, how will the firm buy the partner's share of the company?
• One partner feels s/he is carrying the majority of the load.
  This situation is also fairly common.
  The partnership agreement and chartering documents should outline conditions under which a partner can be fired from the firm in the event of failure to contribute equally to the success of the firm.
  
• The firm's rainmaker decides to leave and start a competing firm.
  

This list could go on and on.
But this list is a good representation of the main reasons for making ownership changes, closing or selling a business.
The point to take away from this list of possible events is that when a partner leaves for any reason there will be implications for the business, for the other partner(s), for the departing partner and for customers/clients and vendors.
The only way to protect everyone involved with the business is to anticipate every worst case scenario and plan for the contingency.
It is also just as important to fund the succession or plan or buy/sell agreement as it is to write the plan.
Life does and will continue to happen.
Without a succession plan the results could be catastrophic; with a funded succession plan it could be nothing more than a hiccup