Succession planning is much like running a relay. The greatest challenge and opportunity for disaster is passing the baton. The hand off from the current business owner to either a family member or a key employee(s) can be tricky. If the current owner is also the founder of the company, the first hand off from founder to successor can be frustrating and conflicted. A number of issues typically come into play. The current owner often sees the sale or revenue of the business as the major source of funding retirement. If the previous owner perceives that the new owner is not running the business properly, the urge to reach back and take control can be huge. This is especially true in many family situations. A father can find it quite difficult to keep his mouth shut and not comment on the business at family gatherings. The Bridge Builders Team has over 25 years of experience helping families and partners to get along. They understand certain dynamics and issues in succession planning that attorneys and other professionals in the field are not equipped to address.
With us, we seek a “win/win” for all parties involved – previous owner, new owner, heirs, spouses, and employees. For many, the exit strategy involves retirement and estate planning as well. Here is an outline of how Bridge Builders will help you to build a professional team to assist you in all facets of succession planning:
- Initial assessment of goals and needs for succession.
- Interview of potential new owner or owners. This is especially helpful if the new owners will form a partnership.
- Business valuation. All parties must be comfortable with the valuation placed on the business, including meeting IRS standards.
- Setting the process and price of exchange between current and new owner(s). This can be a one time exchange, or a process outlined by a timetable.
- A financial planner is often consulted to determine cash flow projections from the exchange, both current and moving toward retirement.
- A CPA or tax consultant reviews implications and costs for all parties.
- A business attorney will need to draft necessary documents for the exchange and new buy/sell agreement reached by the new owners.
- An estate attorney may need to be consulted if assets total more than thresholds for the estate. A trust is often established if needed.
- The trustee or executor of the estate is informed of all desires and instructions surrounding all end of life decisions.
Bridge Builders can help you plan for success in your business. Give us a call at (800)-729-0924.