What Is Actually Meant By Business Succession Planning?
Business succession planning is simply a plan for how a business will operate after major changes in ownership, and is almost always necessary. It is a roadmap for selling, gifting or transitioning a business from one owner to another, whether that is through the death of an owner or through a sale or merger. Our firm often deals with sales between businesses and/or business owners. For example, a business owner may be selling their interest to one of the other owners or to a third party. Alternatively, a competitor could buy out a company in the form of a merger or a consolidation into another business. Business succession planning is the roadmap for how a business owner will sell or transition their business from one owner to another.
How Should I Transfer My Business To My Descendent?
There are several approaches to transferring a business to one’s descendants. Each situation requires extremely individualized attention based on what type of business is involved. The various liability and tax ramifications from a transfer always need to be considered. The best method for transferring a business to descendants starts from the creation of the business. When the founders of a business start that business, they should create and maintain a solid exit strategy that protects the other owners of the business and the business itself. This can be done through operating agreements, partnership agreements, bylaws, and corporate structures of the entity. Most often, a buy/sell agreement will be in place that will assist in carrying out any transfer.
What Are The Main Reasons To Create A Business Succession Plan?
The primary purpose of a business succession plan is to continue a smooth business operation and a seamless ownership transition during the sale of the business or at the death of a key owner of the business. Having a business succession plan in place, and revisiting and updating it regularly, will help remove any confusion of what to do with a particular member’s business ownership interest in the event of sickness, death, or sale.
What Are The Essential Components Of A Succession Planning Program?
Depending on the type of business, there could be several components of a succession planning program. A formal entity structure is the key, as is a plan that allows for flexibility and can be continuously updated as needed. People need to utilize experts in assisting them in the operation and succession of their business. They need to look at more than just the succession plan; they need to look at how they operated their business when they started versus how they operate it when they are ready to sell or dispose of it. Tax advisors, CPAs, financial advisors and attorneys should be utilized to help protect a business owner’s financial interests so that they can continue to run their business through times of uncertainty.
Do All Estate Planning Attorneys Handle Business Succession Planning?
Most estate planning attorneys have experience in handling small and mid-sized business succession planning. However, our office dedicates a portion of our practice to the formation, operation and the succession of a business. We tend to work with business owners through several phases of the business. We have businesses that come in from their infant stage and stay through the sale or disposition of the business. Our services tend to focus on and involve a team approach between our firm and other business and financial professionals. Creating a formal business structure, maintaining proper operation, and consistently revising a succession plan for the business helps protect the personal interests and personal assets of the individual owners from any type of business risks or liabilities.
Is Estate Planning Intertwined With Business Succession Planning?
Estate planning and business succession planning are unquestionably intertwined. If someone owns a small or mid-sized business or a stake in a large business, then they should absolutely focus not only on their personal interest in transferring their house or personal assets, but also on what might happen to their business if they become incapacitated or pass away. The stream of income from the ownership of the business is important to the other owners of the business and any stakeholders who might be involved, it might even involve the livelihood of other people in the community. If someone owns a small business, then we will begin focus on their individual estate plans and then we will make sure that we have follow up meetings related to how their business succession planning should tie in with their personal estate plan.
For more information on Business Succession Planning In Ohio, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (937) 715-0705 today.
Call For A Free Case Evaluation (937) 715-0705