At the Obi Law Group we advise families, professionals, and businesses in estate planning and asset protection strategies that help our clients build and preserve enduring legacies. We have a particular focus on estate planning for family businesses and business succession planning.
What is a Business Succession Plan?
A Business Succession Plan is a multidisciplinary process providing a comprehensive and strategic approach to guiding the transition of business ownership. It is one of the most important components of a business’ strategic process that provides a roadmap for estate and retirement planning, addressing trigger events such as death, disability and illness, securing the survival of the business through effective transition of ownership interests and maximizing the return of the retiring owner’s investment.
Business ownership is one of the most important ways to build generational wealth for families and their communities. A proper business succession plan is a document that’s used to outline who will take over the business in your absence, incapacity or death.
Family Owned Businesses:
Family owned businesses are the single largest economic driver in the United States, creating more wealth and opportunity for individuals, their families and future generations. Unfortunately, only 30% of family businesses will survive into the second generation, 12% remain viable into the third generation only 3% operate into the fourth generation. These results are driven by the absence of a comprehensive business succession plan and waiting as opposed to starting the process early.
Various studies have revealed that 80% of business owners exit their business to retire and that 50-75% of a business owners’ net worth is in his/her business assets with the balance is in their personal real estate and financial investments. Yet the sad truth is that 85% of family businesses have no business succession plan, 67% have no buy-sell agreement and only 29% have an estate plan.
Ideally, a formal business succession plan should be developed at the time of business formation and then be revised regularly. Early planning provides flexibility, allowing family’s succession strategy to alter course more easily if circumstances change. Our business succession planning attorney can help you accomplish your financial and lifetime goal
When building out your long-term risk management and business strategies, there are a number of scenarios to consider when creating a succession plan.
First, ask yourself who would run the business if something happened, and you became incapacitated. If you’re in a serious car accident, for example, would a business partner or family member be able to step in to keep things running?
Second, consider what will happen to the business if you decide to retire. Depending on how the business has been structured, you could do any of the following:
Finally, think about the planning necessary in the event you pass away. In that situation, the options may be similar to those for your retirement planning.
A solid business succession plan should cover all three so that there’s no confusion about what happens to the business if you’re not there to run it. It should also include contingencies for helping employees make the transition and training your successors in how the business is run, if necessary.
Family Business Succession Planning Lawyer
We work with business owners to understand their individual and unique situation taking a multidisciplinary approach to the development and implementation of a comprehensive business succession plan. We provide support and life-cycle management of the business succession planning process including the following components:
Components of the Business Succession Planning Process
The health and longevity of a family business depend on early succession planning and on communicating the results of that planning in a timely fashion. Planning efforts are a continued and dynamic process rather than a single event. Our strategic approach to business succession planning we believe will increase the likelihood of the business becoming multigenerational and endure leadership and ownership transitions and deliver lasting value to the owners, family and other key stakeholders.
The day will come when you will relinquish you ownership interests to another party. It will either be planned or unplanned. The Obi Law Group can assist you in all aspects of establishing and managing all aspects of a comprehensive business succession plan. Contact our business succession planning attorney to discuss your business transition requirements today at 502-309-2512 or use the appointment link below to schedule an appointment.
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