Pass on Your Legacy by Planning for a Business Succession
You have probably spent a good portion of your career, if not the entirety of it, investing your own human capital in your business. For many business owners, it is important to ensure that the business they worked so hard to propagate continues its operations after they have passed the torch.
Business succession planning is essential for anyone who wants to ensure a smooth transition and continued successful operations. Whether you intend to pass along your business at the time of retirement, at the time of death or when you decide to exit gracefully from direct involvement for any other reason, it is critical to put a business succession plan in place well in advance.
Some of the essential issues in business succession planning
One of the preliminary steps of establishing a business succession plan is choosing a successor. Perhaps you want partners to continue the business in your absence, wish for certain members of your family to take over or have a candidate from some other area of your life in mind. Selecting a successor is a decision that deserves thoughtful contemplation. Of course, for some business owners, a sale of their complete interest in the business is their preferred exit strategy.
A valuation of the business is also an important aspect of planning for succession. By valuing your interest in the business as an owner, you can plan ahead to minimize any applicable transfer taxes, can structure a future buyout by partners or external parties, and, if the business is to pass upon your death, can cut through a great deal of red tape and ensure that the probate of your estate is completed in a more efficient manner. An appraisal can be conducted to set a market value, or, if the business is to be bought out by a specific party or parties, the price can be set by agreement.
Finally, there are the many nuts and bolts considerations that come along with the prospective transfer of any piece of property as complex as a business (regulatory compliance with any application government rules, transfer of title, etc.).
Do not put off business succession planning
When do you need a business succession plan? If you anticipate retiring soon, or intend to step down from your current role in the business, the immediate need for a plan is obvious. But, even for those who wish to continue in their current role as a business owner for years to come, business succession planning is something that is best considered sooner rather than later. Personal circumstances can change rapidly, and you may change your mind about the path you intend to tread in the future. In addition, if death or disability strikes and you do not have a plan in place, succession can be a messy, conflict-ridden ordeal.
Business succession planning is the responsible, prudent thing to do. Ensure that your business legacy lives on and that your wishes are carried out by seeking the advice of a business succession planning attorney.