Business Succession Planning
Business Succession Attorney in Grand Junction
You've spent years of hard work growing your small business, planning next year's crop rotations or forecasting sales and production schedules, but have you planned for your eventual exit from your business? Many business owners have never seriously addressed this critical component of their business plan, leaving the future of their companies in jeopardy. An often quoted statistic holds that approximately 70% of small family businesses do not survive into the second generation, yet most founders expect that their children will succeed them at the helm. Without a comprehensive Business Succession Plan your business could become a statistic, but pro-actively planning for the eventuality of your retirement or death will ensure a smooth transition to the next generation.
All Business Succession Plans should address these issues: (1) ownership; (2) management; and (3) taxes.
Ownership issues include:
- Will the business be sold outright, and if so when, to who and for how much?
- Will your children or spouse inherit the business?
- How do you protect the interests of your children if your spouse is not their parent?
- How do you equitably divide the interests in the company between your children when some of them are not actively working in the business?
- Is the interest of the non-participating child bought out? How is the purchase price determined?
Management issues include:
- What happens if you have a non-family member partner?
- How will you decide who will fill the various key positions?
- Who will manage the business - your spouse, one of the children or all of them?
- Who will manage the business if your children are too young, not interested or don't have the skills necessary to effectively manage?
Tax issues include:
- Avoid triggering business killing capital gains taxes.
- Eliminate or reduce estate taxes.
- Provide the liquidity to pay the taxes.
Each case is as unique as the individuals and business involved and deserves a unique solution. The key to avoiding resentment and conflicts between family members and employees is a well-crafted plan that eliminates the uncertainty that accompanies the founder's death, incapacity or retirement and provides a clear blueprint for the future of the company. Ideally, the plan should be in place from day one and should be reviewed regularly. Each family member who is involved in business operations should execute an Employment Agreement and a Buy-Sell Agreement that provides for the purchase of a family member's interest in the event of his or her death or desire to sell his or her interest. And finally, any Business Succession Plan must be carefully coordinated with the owner's estate plan in order to achieve the optimal result.
Since 1993, the Law Offices of James A. Littlepage in Grand Junction has provided detailed and personalized Business Succession Planning for farmers, ranchers and small business owners. A former CEO of a business with $50,000,000 in annual sales, Mr. Littlepage has the knowledge and expertise to assist you in establishing a Business Succession Plan that will enable your business to grow and prosper during your lifetime and after your death. For assistance please contact our Grand Junction office.