One of the most significant drivers of economic growth in the United States is the strength of family businesses. Unfortunately, however, the number of family businesses that are survived by second or third-generation owners decline significantly. One contribution to this is the fact that many family businesses don’t have a succession plan.
At its most basic level, business succession planning refers to a plan that determines when the owner may retire, what position in the company they are eligible to maintain when they do retire, who the new owners of the company will be, and what specific rules those new owners must operate.
Business succession planning requires multiple stages and often the support of an experienced business succession planning lawyer. These stages can include:
- Developing goals to decide whether the business will be sold to children, an employee or an outside party.
- Creating an advisory team including your accountant, attorney, financial advisor, insurance agent and key internal employees.
- Completing financial valuations to ensure that the business is prepared for a transfer in the future.
- Determining estate planning options that could help to reduce estate or income tax liabilities.
- Documenting a plan to decide the cash flow results of any sale and verifying that any legal documents for the business owner and business have already been created.
It is also important for the business owner to understand the implications of these documents before signing them. A business succession plan is easy to put off but because it can have a significant influence on the transfer of your business. You want to engage in this process now with the support of a business succession attorney in Pasadena.