If you, like the vast majority of business owners in the U.S., own a family business, you have no doubt given thought to what will happen to your pride and joy company in the long-term. A skilled business succession/estate planning attorney will help you in your quest to ensure your business’s longevity, even after you retire, become unable to manage it, or pass away. At Surprenant & Beneski, P.C., our lawyers are not only experienced but accomplished in both of these legal specialties. They will be able to answer all of your questions regarding business succession, including:
Who will take over the company?
In most cases, owners of family-owned businesses want their relatives to succeed them, but you may have to face the fact that your loved ones are not proficient in the skills needed to do this successfully, or that they have no interest in fulfilling your dream. Either way, discussing and coming to terms with reality is necessary to moving forward. You will have to accept that you will be grooming your loved one to take up the mantle or selling the business to someone else.
What preparation will you have to make for your appointed successor?
Whether you plan to have a family member, a company insider or a third party take the reins, you must be sure that the individual is energetic and capable. You must also:
- Familiarize her or him with the workings of the business
- Introduce him or her to your staff to facilitate a smooth transition
- Agree to a financing strategy to ensure that you are properly compensated
- Work out a reasonable timeline so that, if circumstances allow, the takeover is as seamless as possible
- If you are leaving your business to an heir, make certain, that he or she is either exempt from estate taxes because your business is valued at $11 million or less, or he or she will be able to pay estate taxes while still keeping the business afloat*
*A life insurance trust can provide funds to a successor/heir without worrying about estate tax or probate.
These steps should be taken with the assistance of an astute business succession attorney. Only a professional with a firm grasp of your entire financial situation will be able to guide you, draft and review any necessary documents, and ensure that all the steps taken are legally binding.
How will your business be evaluated when the time comes?
Here again, having a competent business succession attorney is invaluable. He or she will help you to understand precisely what elements of your business must be considered in determining its sale value. These include:
- Financial revenue
- Profits and net cash flow
- Assets, both tangible and intangible, including property, stock, contracts, and intellectual property
- Possible recent sale prices of similar businesses
- Return on capital investments
- Earning prospectives or expected investments in the company
What is the right time to sell your business?
In a perfect world, you would pick the moment to pass your business on to its next owner, but circumstances often determine the time for you. Your health or the health of a loved one may push you to retire sooner than you had expected, or make it impossible for you to keep working at the same pace.
On the other hand, an unexpected inheritance, a shift in the national or global economy, the birth of a grandchild, or the fact that your business is doing fabulously well or needs a shot in the arm — any of these may persuade you that this is the right moment. Your business succession lawyer, who has observed the ebb and flow of businesses for many years, can give you an unconditional go-ahead, or caution you if there are red flags that this may not be the right time to move ahead with your plans.
Should you stay connected with your business after you sell?
No two situations are identical and much will depend on the nature of your business, the state of your health, the appraisal of your business’s worth at this particular time, or any number of other factors. A great deal will depend on your personal preference. Are you ready to close the door on your business and sail off into the sunset? or do you want to remain involved, assuring longtime customers that your business remains the same company you created, despite its new ownership. Whatever you decide to do, our business succession attorneys will help you do it successfully on your terms.