Business Succession Planning
A successful business typically requires all of the energy, resources and creativity a business owner can muster. Consumed with the “now” of the many issues that make demands on their time, the last thing most business owners think of is the following very important question:
What will happen to my business when I am gone?
This is the focus of business succession planning.
Also known as “exit” planning, business succession planning provides the business owner a road map toward his or her ultimate destination:
Transferring ownership and control of the business to a co-owner, a new generation of
family members, the existing employees or a third-party owner.
Our attorneys work with our business-owner clients and their other professional advisers to identify the optimum exit-plan strategy. This typically includes valuation of the business itself, reviewing corporate structure and key contracts and relationships and evaluating business strengths, weaknesses and opportunities. The outcome of this process typically leads to a plan for:
- Arranging insurance-funded and other buy-out arrangements in businesses with multiple owners;
- Developing legal arrangements to keep the business in the family or among existing employees; or
- Selling ownership interests or the assets of the business to a third-party buyer.
Succession Among Multiple Owners
In a business owned by more than one owner, one of the biggest challenges is providing liquidity for the buyout of the business upon the occurrence of certain key events. Our attorneys assist ownership groups prepare for a smooth transition of ownership upon the occurrence of death, disability, termination of employment or retirement.
Transfers to Family Members or Employees
If the goal is to keep the business in the family or among existing employees, business owners are typically immediately faced with the following dilemma: Where are my family members or employees going to get the funds to buy out my interest in the business? Our attorneys work with business owners to find solutions to this frequent challenge which often include deferred compensation arrangements, debt financing, stock options and other buy-out arrangements.
Transfers to Third Parties
If the goal is to sell the business to a third party, our attorneys help clients:
- Determine whether a business broker or investment banker should be involved
- Document letters of intent
- Select the form of sale
- Document the sale transaction
We Can Help!
In the life of business ownership, as in the life of an individual, it’s not if but when the end will come. Exit transfers can either be planned or unplanned. In our experience, planned transfers are much better!
With his experience and educational background as a Certified Public Accountant and business-transaction attorney, attorney Stephen L. West is prepared to help you negotiate the often complicated and confusing pathway toward a successful exit from your business.