Business Succession Planning
Maintaining a successful business relies on having a rock solid plan for succession. Whether you want to pass the business on to family, sell it to an employee, or bring in outside buyers, your outcome depends heavily on well-informed planning.
Your Business Is Part of Your Estate
Not all business owners realize that succession planning runs alongside estate planning, even though the business is their single largest asset. Transitions that happen without a plan, especially when adverse circumstances are involved, can destroy value that took decades to build.
Succession planning means creating a roadmap for how the business will continue, who will own it, who will run it, how it will be valued, and how you will be compensated for it.
Key Questions to Answer
DaltonMurray can help you take stock of the hard questions so you can get started thinking about the answers.
Who takes over? A family member? Employee? Outside buyer? Each path poses different legal, tax, and financial considerations. While there's no single right answer, there needs to be an answer.
How is the business valued? Clear valuation methods prevent sale prices from being disputed at the worst possible time. Common approaches include fixed price, formula-based valuation, and independent appraisal. We can help you choose and document the right method for your situation.
How will the transaction be funded? Where will the money come from? We can help you survey different structures, such as installment sale arrangements, SBA financing, and others.
What happens if you become disabled? Most buy-sell agreements address death but not disability. Your plan for ownership shouldn't leave you trapped in a business you cannot run.
If you have a business partner, a buy-sell agreement is essential, otherwise a partner's death or divorce can force you into a business relationship with someone you never chose. A well-drafted agreement helps to prevent that scenario.
Passing the Business to the Next Generation
Transferring a family business to the next generation involves both business planning and estate planning. It also involves the family dynamics of treating children fairly, which may not mean treating them equally, particularly if only some are involved in the business. We help families work through these conversations and put structures in place that are clear, fair, and legally sound.