Business Succession Lawyer Helping Residents in Easton, New Bedford & Hyannis
According to the U.S. Census Bureau, about 90 percent of businesses in the U.S. are family-owned or controlled, many of which may not be prepared for the owner’s sudden death, illness or retirement. Given the fact that no business can survive without a capable leader at the helm, the best way to protect your family-run or closely-held business is by establishing a business succession plan.
Surprenant & Beneski, P.C. a premier estate planning practice representing clients in Southern Massachusetts, Cape Cod, and the Islands, routinely advises clients on business succession planning. By taking the time to understand your objectives, we will design a plan that will not only allow your business to continue operations if that is your preference but one that will also protect your family’s interests.
Our estate planning attorneys negotiate and prepare all necessary legal documentation that will allow for a seamless transition. Additionally, we routinely collaborate with a respected network of financial professionals to arrive at fair and accurate business valuations. We are highly regarded for helping our clients plan for their future and achieve their business goals. When you partner with us, you will have peace of mind knowing that your business legacy will be preserved.
How do I create a business succession plan?
A business succession plan starts with selecting a successor, which hinges on factors such as the type of business, how the business is structured, and the parties involved. If a family-run business does not have a succession plan, disputes between family members as well as non-family business partners could arise over control of the business.
In a well-conceived business succession plan, the individual most capable of running the business will be designated to assume a leadership role. Additionally, it is necessary to set guidelines for how the business will operate by clarifying the roles of the involved parties. Finally, it is crucial to establish a dispute resolution procedure to avoid litigation that could disrupt operations and potentially derail the business.
What is the value of my family-run business?
A crucial component of any business succession plan is determining an appropriate business valuation. At Surprenant & Beneski, P.C., our business succession planning attorneys have working knowledge of the three primary methods of valuing a closely held business — the asset approach, the income approach, and the market approach.
The asset approach is the most basic business valuation method. This simply evaluates the stated assets on the balance sheet and subtracts the liabilities without accounting for market conditions or goodwill. The income approach is a bit more involved in that it combines an analysis of past earnings with projected future earnings. The goal of evaluating future cash flow and capitalization is to determine both the present and future value of the business.
Finally, the market approach analysis involves analyzing the recent sale of other businesses in the same industry based on factors such as the size, duration and market risk of the business. In any event, the objective is to arrive at a fair and accurate business valuation that will protect your interests and those of your family members and other business partners.
Transferring the Business
The business succession planning attorneys at Surprenant & Beneski are committed to ensuring a seamless transition of your business by drawing up the necessary buy/sell agreements, particularly cross-purchase agreements and entity purchase agreements.
A cross-purchase agreement is typically utilized by businesses with only a few owners, such as partnerships. In this arrangement, each partner buys and owns an insurance policy on the other partners. In the event that one of the partners dies, the surviving owners receive the face value of the policy as beneficiaries, who then use the proceeds to purchase the deceased partner’s stake in the business.
By contrast, in an entity purchase agreement, the business purchases a single insurance policy on each partner and the business is also the designated beneficiary of the policies. If one of the partners dies, the business uses the proceeds from the policy to redeem the deceased partner’s share, which will increase the value of the remaining owners’ shares.
Contact Our Southern Massachusetts Business Succession Planning Attorney
The best time to establish a business plan is at the outset, in order to mitigate the potential for conflicts among family members and partners. When you consult Surprenant & Beneski, we will design a business succession plan to ensure the long-term viability of the business when you are no longer at the helm. By understanding your business objectives and the role of family members and partners in the business, we will work to protect both your business and personal assets, as well as the interests of your surviving loved ones. With a well-designed business succession plan in place, you can help to preserve your life’s work and your brand for future generations. Please contact our office today to set up a consultation.