Business Formation – Succession Planning

If you are a business owner, you know how hard you have worked to build your business and make it profitable so that you can support your family.  You are undoubtedly the key link in your business’s success.

What would happen to your business if you were suddenly incapacitated or died?  Would your business continue to flourish and support your family, or would it quickly wither because you are not there to nurture it?  If you have not planned for these possibilities, you are leaving the success of your business and your family’s financial welfare in a precarious position.  We can help you plan for these contingencies.

If you have one or more partners in your business, we can help you prepare a Buy-Sell Agreement.  This agreement protects you in case one of your partners dies.  You will have the right to buy your deceased partner’s share of the business.  That way, you don’t have to deal with your deceased partner’s spouse or children, who may not know how to run your business.

A Buy-Sell Agreement can also protect your family if you die unexpectedly.  Without a Buy-Sell Agreement, your family has no guaranteed buyer and no guaranteed price for your interest in the business.  Selling a non-controlling business interest after a death can be like a fire sale.  Your family will have a hard time getting a price anywhere near the true value of your interest in the business.

On the other hand, a Buy-Sell Agreement requires your partner to buy your interest in the business at a value that is set by the agreement.  Since none of the partners in the business know who is going to die first, there is a strong incentive to make the purchase price fair to all parties.  That helps ensure that your family will get fair value for your interest if you are the first partner to die.

Once you have protected your family by planning for these worst case scenarios, you then should turn your attention to maximizing the value of your business if you want to retire.  If you want to retire and enjoy the fruits of your labor, you need a plan that answers the following questions:

  • When do I want to retire?
  • How much income do I need in retirement?
  • Who will take over the business?

We can help you answers these and many other questions that you need to address to maximize the value of your business when you retire.