Business Planning

Who will take over your business upon retirement, death or disability?

Your business partner / shareholder? A son or daughter? Sale to a competitor? Sale to an outside entrepreneur?

How will that transfer to your successor happen? Will it be well-planned? Or will it be chaos?

88% of current family business owners believe the same family or families will control their business in five years, but succession statistics show this is not true. There is a disconnect between the optimistic belief of business owners and the reality of the failure of family business to survive through the generations because only about 30% of family-owned businesses survive into the second generation; 12% are still viable into the third generation; and only about 3% of all family businesses operate into the fourth generation and beyond. (Family Firm Institute www.ffi.org)

“Business succession planning” is the art of combining legal and financial expertise with a counseling approach to prepare your business for the future:

  1. Evaluation of business legal structure, financials and value;
  2. Understanding of business owner vision for the company, personal goals, and family dynamics;
  3. Comparison of family succession to third-party equity sale;
  4. Evaluation of legal and financial models for structuring a transfer;
  5. Selects a plan based on achieving your goals; and
  6. Implement legal and financial tools to carry out the plan.

If you are a business owner of a small to mid-size family or closely held business, then business succession planning is for you.

Here are just a few examples of our recent cases in various industries:

Family farming operation with significant land holdings. We created a business and estate plan structure that allowed one child to remain the sole owner/operator of the farming operation but provided two other siblings with passive income from agricultural leases through a Family Limited Partnership. Achieved family goals of: business continuity, minimizing risk of need for liquidation of legacy farmland, income to non-farming siblings.

Construction company. We explored risks and benefits of internal sales to employee, then prepared for and found a private equity firm buyer to achieve shareholders’ goals of selling the company and providing retirement income.

Technology company. We created an equity buy-in for a key employee to achieve founder’s goal of retaining and incentive for key employee with profit sharing.

Family landscaping company. We explored and financially modeled a phased sale to a child and their spouse over a multi-year term to achieve founders’ goals of transferring legacy business to the next generation, providing income in retirement, without large down payment requirements to children.

Law firm. We represented a partner in the buyout of a deceased senior partner’s estate ownership in the firm.

Medical Group. We represented the CEO and majority shareholder in implementing a buy-sell agreement funded with life insurance to achieve the CEO’s goals of liquidity on death of a shareholder and restrictions on transfer of shares to other professionals without a first right of refusal by the group and the other shareholders.

Whether your business is just starting or preparing for succession, our combined business, trust and estate legal and financial expertise can create alternatives for the most difficult and complex situations.

Contact us here if you like to discuss the future of your business further.