As a family business owner, your retirement planning is not simply a matter of deciding not to work anymore. You need to address critical questions such as “What happens to the business when you’re no longer running it?” and “Will you have enough money to retire?” Planning for succession involves several complicated issues, including how to divide the family business, allocate value, and tackle complex tax issues.
At our firm, we understand that passing down a business involves complex emotional, financial, and practical considerations. That’s why we offer comprehensive succession planning services to help you identify the right buyer, determine who will run the business, minimize the tax burden, and make the transition fair and equitable.
Our approach to succession planning
We begin by understanding your feelings about key succession planning issues, such as who will take over the business, whether it will be sold or passed down, and how to minimize the tax burden. We then focus on the key issues, such as the valuation and potential restructuring of the business, tax consequences, and preparing for due diligence procedures. Our experienced financial advisors work with you to develop and implement a well-designed succession plan that is tailored to your unique circumstances.
Five key issues to consider
Based on our experience advising family businesses, we have identified five key issues that are essential for a successful succession plan. These issues include:
- Sudden change in management: Your business needs a contingency plan to prepare for sudden management changes. This includes articulating a clear vision, defining all roles and responsibilities, having structures in place to connect the family and the business, and allowing owners a dignified and properly compensated exit.
2. Orderly transition: Even if you don’t plan to leave your business for another decade or longer, it’s important to plan for a smooth succession. This involves building a formal succession plan that covers the fundamentals, creating legal documents that guarantee the succession plan, and formally training and integrating the next generation of family into the business.
3. Estate taxes: The Estate tax law is ever-changing, and payment is usually due nine months after a person dies. This federal tax liability can put a tremendous burden on a family business, and preparing for any potential obligation can help reduce or eliminate strain and help ensure your business’s survival.
4. Concentration: One of the greatest threats to family business owners is “concentration,” or tying up personal wealth in a business and subjecting it to the same risks. Moving some personal wealth from your business into complementary investments can safeguard against such economic vulnerability.
5. Family involvement: Successful family businesses anticipate tension and disagreements long before they happen. You can do so by being clear in your business objectives, taking steps to include other family members, and creating effective family meetings.
Why choose our firm?
At our firm, we have over 30 years of experience advising family businesses. We understand the unique challenges and opportunities that family businesses face and have a proven track record of helping businesses successfully transition from one generation to the next. Our team of experienced financial advisors will work with you to develop a tailored succession plan that meets your unique needs and helps ensure the long-term success of your business.