Business Succession Planning

Most business owners tend to ignore the idea that a day will come when they must relinquish control because they are emotionally involved. Lack of a well-prepared plan can result in a host of problems when the owner ceases to maintain control. For example:

• Next generation is not prepared to assume control
• A successor has not been named or identified, e.g., a family member, another competitor, a private investor
• Insufficient liquidity to support a family buyout
• Methods to fund the transfer have not been examined or put in place
• No plan in place to help avoid family disputes

A successful transition requires a written plan that clearly specifies the disposition of the business interests. The earlier the plan is developed, the more time the owner(s) has/have to prepare for succession, maximizing owner value, reducing the risk when exiting the business and planning for a smooth transition.  Some of the items a plan should address are:

• Who receives ownership
• When ownership interest should be transferred
• What restrictions will be placed on the transfer
• What tax consequences will be incurred

Owners may want to consider setting in place arrangements such as:

• Buy - Sell Agreements for Disability and Death
• Equity Financing Agreement
• Initial Public Offering

The best way to ensure the continuation of your business in the future is to start planning today.  The attached presentation "Will Your Business Survive You" provides some helpful hints for your Business Succession Plan.  

To view the presentation, Will Your Business Survive You, Click here.