Often times the terms Succession Planning and Exit Planning are used interchangeably but they should not be. Both Succession Planning and Exit Planning should be addressed as separate plans.
Succession Planning is planning for leadership continuity. It identifies and fosters the next generation of leaders within a business. It’s a process because it requires a company to develop internal people with the potential to fill key positions within an organization. With a proper Succession Plan, a business will seamlessly transition leadership.
Exit Planning is the plan for ownership transition. It is very comprehensive strategic plan to provide an owner the option of exiting their business, how and when they choose, while providing the necessary funds for the next stage of life. When developing an Exit Plan, all issues that are important to a business owner including the business value, key employees, position in the market, the business owner’s personal resources and business resources are reviewed. Succession Planning is just one piece of a comprehensive Exit Plan.