Perpetuation or Succession Planning?

Perpetuation the noun and the related verb “perpetuate” have a Latin root, perpetuus, which means “continuous or universal.” Other meanings for “perpetuation” are lengthening and continuance. So how does perpetuation planning differ from succession planning…or does it?

Perpetuation planning is a term used in business planning, or perhaps more often used in an agency business. I have read a number of definitions of perpetuation planning and some are quite similar to succession planning for small business. One article “What is a Business Perpetuation Plan?” by Lisa Magloff, Demand Media in the Houston Chronical is insightful and also states that “Only around 1.5 per cent of all survive into the third generation of management…” (as reported in the Portland Business Journal.) Also, Ms. Magloff writes, “Many successful business owners sell their business when faced with unexpected circumstances…” There is also in the article an emphasis on formulating a sound “buy/sell agreement”.

The key elements of perpetuation planning offer for an agency/business: the smooth transition to new ownership; focus on maintaining and building value for the agency/business; minimize risk e.g. what happens if the owner of the agency/business is suddenly disabled or dies; provides for continuity of cash flow during transition; and enables the business to take advantage of positive economic forces (i.e. the business is not forced to be sold during periods of slow economic growth). All of these elements sound very much like those of a sound business succession plan.

My sense is that while business succession planning might have more of a focus on “passing on” the business to family (hence the word succession) , the focus of perpetuation planning has a focus on both the internal (i.e. employees retained as shareholders) and the external (finding a business partner outside the agency) (hence perpetuating the business, but not necessarily within the family). I would readily accept thoughts on that!

Regardless of whether your future business planning is focused on having a family member take over the business…or selling the business outright and/or retaining some form of shareholding…the fact is that having a plan is critical to the long term stability and success of your business.

I have written previously about succession planning for small businesses. My own family has owned a small business ever since I can remember. Another article in Insurance Journal (November 17, 2014) by Catherine Oak, titled “Perpetuation Planning” outlines the need for a long term outlook to maintain your business through the generations and also counsels the used of qualified professionals to direct your plan. I heartily concur!

Working to Preserve Your Wealth and Protect Your Future . . . in a Constantly Changing World.

Please see my disclaimer at the bottom of this page and the column, How I Can Help You. You can read more blogs, articles, infographics and details about my Colorado law practice on my website

Barbara Ann Dalvano, Esq. Phone and Text Message: (719) 963-2933


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About Attorney Barbara Ann Dalvano

Attorney in Denver, Colorado with extensive practice experience in the areas of Estate Planning, Wills and Trusts, Business Succession Planning, Probate, Contract Law.

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