Business Succession Planning
One of the most common questions our firm receives from estate planning clients is how to transfer ownership and control of a business to a family member. Many successful businesses—both large and small—were started and continue to be run by several family members. However, as more baby boomers who started these family business approach retirement age, creating a business succession plan and how these plans affect individual estate plans is becoming more important. With over 20 years of experience working on estate planning cases for high net worth individuals, business succession estate planning is one of Antonoplos & Associates most sought-after practice areas. As such, our attorneys have the knowledge and expertise required to create an individualized plan that fit your family’s needs. This allows your business succession plan to serve the interests of all stakeholders in your business while protecting your family’s financial future.
Importance of Business Succession Planning
Currently, 50 percent of the United States’ gross domestic product comes from family-run or controlled businesses. Furthermore, nearly 60 percent of American jobs are because of family-run companies. Thus, not only is the business succession planning key to securing your family’s financial future. However, it is also crucial for the continued success of the American economy. Proper business succession planning has many variations that depend on the size and sector in which a business is located. For example, a small business with only a few employees that are already familiar with the person you are passing your business requires little work to achieve a successful transition. However, if you operate a large business with hundreds of employees or the person you are passing your business onto has not previously worked at your company, this process is much more time-consuming.
Whatever your situation may be, it is essential to begin to conduct a successful transition when you are approaching retirement.
How to Successfully Transition
The transition process from one owner to the next is vital to the continued success of the company. However, many businesses neglect to take the proper steps necessary to successfully transition to the second generation of owners. There are a few important discussions to have and factors to consider before transferring a business. These include the balancing of financial returns, the creation of a proper management structure, a dispute resolution process, and a variety of tax issues.
Furthermore, helping the new owner create relationships and gain respect from managers is key to a smooth transition. This can include having meetings where the collective vision of the company is identified. Furthermore, specific goals and objectives for the business and the stakeholders be created. After this initial step, you should establish the governance process for both the succession and the subsequent management teams. With any business move, you must put this plan into writing. Another simple but necessary thing to do includes identifying if the old owners will have an active or non-active role in the company moving forward. You must also communicate this to the necessary stakeholders. If possible, you should also create a buy and sell agreement and purchase life insurance for the new owners. Finally, it certain cases, you must revise or update your business structure.
Contact Our DC Law Office for More Information
For more than 20 years, Antonoplos & Associates has helped clients when estate planning and business meet. Finally, we represent clients throughout DC, Maryland, and Virginia.
For more information on business succession planning, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys.