While lawyers have long talked to their clients about the benefits of estate planning to prepare for their inevitable exit, they often fail to discuss the benefits of business succession planning to prepare for their eventual, but less dramatic, exit from their business. Despite where you are in your business or life cycle, business succession planning should be an immediate concern.
Implementing a business succession plan can help maximize the value of your business, and, like an estate plan, provide peace of mind while you operate your business. A business succession plan is necessary for both single and multiple-owner businesses, regardless of corporate or other entity structure. It should be flexible enough to address the different interests of various owners, from active employees to silent investors, and certain enough to address the future of the business despite death, disability, retirement, resignation or other changes. A business succession plan can also help retain key employees concerned about your business’ future, and who may be your successors.
It is never too early to plan an exit strategy for a business. A good time is at the inception of the business, as joint owners often have common goals at the start and as a succession plan benefits all. As you generally retain control of your business after the plan is implemented, when circumstances change, your succession plan can be modified or amended, often without adverse business consequences. Succession planning not only benefits your heirs and estate, but your retirement plan as well.
There are a number of business succession tools available. Some center on the sale of the business or the transfer of its value to a purchaser on retirement. Others incentivize employees, family members or potential purchasers to remain loyal to the business and benefit from some of its increased value resulting from their efforts, fostering a win/win culture. Plans also address the situation where your potential successor fails to remain interested in the business. With the wide array of needs and concerns of various owners and businesses, there are a number of solutions that could be right for you.
At Brooks, Tarulis & Tibble, LLC, we can assist you in considering various options for business succession planning and help you to develop and implement an optimal exit strategy. If we can be of assistance to you, please do not hesitate to contact me.
Douglas C Tibble