Business Succession Planning
Very often, a small business owner's largest asset is the business itself. Unfortunately, many owners fail to put plans in place which will protect their business and their family in the event of the retirement, disability or death of an owner. Our Business Succession Planning team can help provide the stability, continuity and security you need for an uncertain future.
FAQs
What is business succession planning?
Stated simply, business succession planning is the process of protecting the owners of a business by planning for the incapacity or death of an owner. The succession plan should address (i) the identity of the successor manager(s) of the business, (ii) the identity of the successor owner(s) of the business (perhaps most importantly, by identifying permissible successor owners, we identify those who cannot be successor owner(s) – creditors and other outsiders), and (iii) treatment of the interest of a departing owner, whether the departure is due to retirement, disability or death. The advantage of putting a plan in place to deal with inevitable events is that we limit (or eliminate) the unknown and can reach mutual consensus before a potential crisis.
What documents are in a typical business succession plan ?
Generally, a comprehensive business succession plan will involve (i) the By-laws of a corporation, Operating Agreement of an LLC or Partnership Agreement of a partnership, which will establish the ground rules of the day-to-day management of the business and the identity of permissible owners of the business, (ii) the Shareholders' Agreement of a corporation or Members' Agreement of an LLC, which will address the ownership of the business in the event of the disability or death of an owner (these provisions will appear in the Partnership Agreement for a partnership) and (iii) the estate planning documents of the individual owners of the business, which will manage the business interest, or proceeds from the sale of business interest, upon the death of the owner.
Why is it important to include a CPA and financial professional in the planning process ?
In addition to retaining an attorney to draft the operative documents, it is important to involve a CPA to monitor the tax implications of the transactions directed in the architecture of the business succession plan and a financial professional to discuss the financial viability of the plan as it affects the business and the individual business owners. For example, if a buy-sell agreement directs the business to purchase the ownership interest of a deceased owner, what are the income tax consequences to the business (and to the individual owners) and how will money be raised for the structured buy-out? The CPA and financial professional are integral to assessing the viability of a succession plan from all angles.
What is the connection between estate planning and business succession planning?
Business succession planning is essentially estate planning for the business and the individual owners of the business. Because the succession plan may address (i) the succession of management to the next generation and (ii) the distribution of ownership interest, or the distribution of proceeds from the sale of ownership interest, to the next generation, it is critical that the estate planning arrangements of the business owner are consistent with the objectives of the succession plan, and vice versa.
What to Expect
We are committed to providing the very best business succession planning services. To achieve that end, you can expect the following when working with us:
Dedication
Assistance from attorneys, legal assistants and other support staff who specialize in business succession planning – estate planning for businesses owners – and who continually receive training to provide the very best services.
Continuity
A team of professionals who will assist you so that the absence of one particular individual will not prevent you from receiving advice on any urgent matter and that we will be available to handle your legal matters promptly and efficiently.
Commitment
A continuing relationship with us so that we can help you, your family and your business in the years to come in preserving your current plan, making changes to your existing plan, and addressing any other issues that may arise. We are truly dedicated to growing with you and your business and helping you adjust and follow through with your plan over time.
A Team Approach
Implementing a business succession plan generally requires the involvement of three professionals – an attorney (who will draft the operative documents), a CPA (who will chart the income tax course) and a financial planner (who will ensure the financial viability of the business as the plan unfolds). We are committed to working with your CPA and financial planner, or in the event you are not currently working with such professionals, to get you in touch with a practitioner or firm with whom you are comfortable, to ensure that your interests are protected.
A Helping Hand
In the event a legal, tax or other matter arises for which we are unable to provide proper advice, we will ensure that you are provided with referrals to the most capable and trustworthy advisors who are committed to the same standard of excellence to which we dedicate ourselves.
Our Fees
The Initial Meeting
Our initial meeting with prospective business succession planning clients is complimentary. This meeting provides you with a chance to get to know us, provides us with a chance to get to know you, your family situation and your financial situation and business arrangements and will allow us to make recommendations as to the planning arrangements which will allow you to realize your business succession planning objectives. Following this meeting, we will provide you with the fees associated with our recommendations.
Fixed Fees
Whenever possible, we will provide you with a fixed fee for the services we will be providing, so you will know the cost. There are times when the project we will be working on is open-ended enough that it will be in your best interest to bill the case on an hourly (time and charges) basis. However, the fee for a majority of our business succession planning services will be identifiable up front.
Amending Existing Documents
If you have existing business succession planning documents and you are interested in amending those arrangements, we may bill that project on an hourly (time and charges) basis. In these instances, we will make sure that we utilize our staff to make the project as cost-effective as possible.