Preparing for Succession
Business Continuation and the Buy/Sell
By Tim Conti, ChFC, CLU - Wealth Solutions of Central Florida
You've
put too much into your business to have it unravel when you're no
longer actively involved. My company has done intense research on
the subject of business succession and the findings were
conclusive. All will die, some will be disabled and yes, a few
will actually retire. Upon the occurrence of one of these
triggering events, several important financial considerations become
clear.
- Will it provide income for you? For your spouse and family?
- Will your family sell your interest? If so, at what price?
Will potential estate taxes jeopardize its continuation?
- Who will inherit your co-owner's interest in your business if something should happen to him or her?
It's
no surprise that many business owners don't know the
answers. Planning for ownership succession can seem
complicated. If God owns your business, you realize there is more
at stake here than just what was asked in the questions above.
Without a plan for ownership succession, your departure will create
confusion! (1 Corinthians 14:33). Besides the potentially serious
impacts to family members, employees, and surviving owners, critical
decisions may be left to outsiders of your firm.
One
solution may be a Buy/Sell agreement. Working with a capable
advisor and counselor (Proverbs 20:18) to implement a plan will also
help you:
- Preserve the value of the business for you and your family.
- Establish a method for valuing your business interest.
- Determine the estate value of a non-family owned business.
- Ensure continuity of critical top tier management
Most
importantly, these agreements can enable you to select your successor
and owners who will continue to set the direction for the good work
you've begun.
