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Creating a Business Succession Plan

Andy Rubin, Google Inc’s architect of Android technology, recently stepped down from his position as Senior Vice President of Mobile and Digital Content at the company. Rubin is credited with developing the global mobile operating system into an open-source platform installed on roughly two-thirds of the world's smartphones. His successor is now responsible for the Android group, as well as the company’s Chrome division, a new group structure reflecting the recent convergence in the paths of these two Google technologies.

While Google Inc is a major international company, smaller businesses will also face succession issues. This is particularly true for family-owned businesses, with only an estimated 30 percent of businesses surviving into the second generation. Planning a smooth transition for these businesses is crucial, since a careful handover by the older generation to the new one can play an important role in avoiding any infighting or rifts.

Arranging succession at an early stage while the outgoing director is younger or in good health has its advantages. Outgoing directors will be fit to stay on board for a time to train their replacement, and to ensure that the company retains a certain style of operating.

Whether a family member or an outsider is chosen to drive the company forward, the future success of the business can be more easily assured with support from the staff and the board of directors. This is best achieved through clear and open communication with the incoming CEO. Preparing legal documents which set out each party’s rights and responsibilities will go a long way toward preventing future complications. Where the retiring CEO of a family business retains an interest in the company, setting down the extent of their rights in a formal document will also help avoid disputes.

To ensure that your business succession proceeds smoothly, you can plan ahead with the assistance of an experienced corporate lawyer.  In addition to helping you draft any relevant legal documents, your attorney can also act as a mediator, communicating between different parties to resolve any issues connected to the transition.

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Creech Liebow & Kraus
333 West San Carlos Street, Suite 1600
San Jose, California, 95110-2726 USA