Business Succession Planning Attorney Proudly Serving Livonia, Northville, & Plymouth
When forming a new business or bringing in new owners of a business, it important to consider succession planning. Thoughtful business succession planning helps ensure the ongoing viability of an enterprise, should the unexpected happen. With careful advanced planning of an owner’s death, divorce, disability or departure from the business, disruption to business operations can be minimized. A well-formed succession plan can also ensure that the ownership of the business will remain closely held by the original owners and founders or their immediate family members.
Matt Devitt Law, PLC practices in both estate planning and business law and will help owners create the ideal comprehensive business succession plan focusing on both major components; 1) estate planning and 2) the management succession plan.
Business Succession - Estate Planning
A comprehensive estate plan for a small business owner should focus on more than just personal assets, but also address issues such as succession to the beneficial ownership of the business, lowering of transfer taxes, and proper estate splitting for family members who are not active in the business.
Without a proper business succession plan as part of your overall estate plan, your stake in the company is either passed on to relatives as part of the estate or absorbed by other shareholders. In family businesses, this can often lead tension as those that are more active in the business may feel entitled to a larger share.
Management Succession Planning
A key component to succession planning is a well drafted buy-sell agreement. The buy sell agreement has three key components and helps ensure that owners 1) guarantee a market price at a predetermine price, 2) fixing the value of the owner’s interest for tax purposes, and 3) remaining business owners are guaranteed control of the business at the completion of the sale.
Matt Devitt law, PLC will help with all three steps during the drafting of the buy-sell agreement by defining triggering events, setting the purchase price based on the best formula for the business type, and setting the payment rates.
Goals of a Succession Plan
An attorney who practices in both business and estate planning will help business owners and shareholders create a transition plan that is smooth and achieves the goals for the family and the future of the company.
The following issues should be addressed in business succession plan:
Keeping the business shares within the family. Also, implementing a family employment plan regarding when and if family will be hired and who will supervise the business.
Address issues related to estate plan and how to best reduce estate taxes.
Develop exit strategies and plan for life’s inevitable changes like retirement or simply finding a new passion.
Determining the best structure for a buy sell agreement, including cross-purchase buy-sell and wait and see buy sell agreements, as well as, supporting the funding of the buy-sell.
Avoiding a crisis by properly planning for all unexpected future events.
Helping to ensure that key employees understand what will happen during the succession and taking care of them in a way that will ensure that their services can be secured.
Creating a successful business takes an extraordinary amount of hard work and personal sacrifice. Unfortunately, many small businesses do not have a succession plan, which causes a lack of stability and family harmony during the transition phase. Contact Matt today and take the next step in your succession plan.