Business Succession Planning
Owning and running your own business is an exciting experience. You as entrepreneur need to focus on what you do best – your business. We can help! We can bring a properly delineated legal structure that will ensure that you are not worried about anything but your main goals – your business. We will help you structure your business with the most tax-advantageous infrastructure in mind.
One important, but often overlooked, responsibility of business owners is succession planning. Since your business likely employs people, provides work for vendors and contractors, and does much more, you want to make sure that it will continue to operate successfully after you exit the business, start another enterprise, related or unrelated to the first one, get a divorce,have children or new partners join you in your business. While many people think that this type of planning can wait until they are within a year or two of wanting to retire, that is not the case. It is impossible to foresee if you will become sick, experience an accident, or have some other event happen that forces you to stop working. Most importantly, the growth of your business may happen “overnight” and you need to ensure that you are not caught off guard without the best structure in place. This is why succession planning should be started early in your business and continued throughout your time with the company. Businesses grow and evolve, they change direction and strategy. Your business plan must follow closely.
How will your business operate – create the best structure
You know well what it is that you want to do. You have the capital and may even have partners or investors. Call us to help figure out the best legal framework for your business. Whether it is a manager-managed or member-managed LLC or partnership, sub-chapter S corporation or C-corporation, we can help identify structures that will work for you and your partners. We will closely work with you and your advisors to create a structure with affiliates or sister companies or holding companies to ensure that business goals are met. Trusts can play a crucial role in structuring ownership early on. It can ensure that your business assets are not subject to divorce proceeding or creditor claims.
New partners – adjustments to the existing structure or exist strategies
If you have a successful business that has grown to a point where you would like to have new partners or investors join you, we will help make sure that your control over the business enterprise and your financial interest in the company are preserved and secured. There are many ways to address issues and concerns of the new partners or investors and we can help. Having a silent partner or an active partner or a new business manager or your grown up child or spouse join your business is exciting but can be stressful, and we can formalize the best possible structure for you and your co-entrepreneurs to minimize your stress and risk of conflict.
Who will Take Over the Company
Whether you are the only owner of the company, or just one of several owners, you need to think about who will take over your responsibilities when you leave the company. There are many options that you may choose, so think about them all to ensure you’re doing what is right not only for yourself, but also for the future of the company. Some of the most common options are:
Co-Owner Buyout – If there are multiple owners in the company and one of them wants to leave, the other owners will often have the first option to buy out the leaving partner’s share.
Pass to a Loved One – If you have a child or other loved one who is interested in running the company, you can be grooming them for years to ensure they are ready to make the business a bigger success. Your partners may or may not agree to the succession and we can help establish that, after you are gone, your spouse or child is not “bullied” into a sale of the shares and is not kept on the curbside of the business operations.
Pass to a Loved One – If you have a child or other loved one who is interested in running the company, you can be grooming them for years to ensure they are ready to make the business a bigger success. Your partners may or may not agree to the succession and we can help establish that, after you are no longer involved gone, your spouse or child is not “bullied” into a sale of the shares and is not kept on the curbside of the business operations.
Entrepreneur – There are often entrepreneurs who would like to take over an already successful business. Consider finding a good fit for your company and preparing them to take over ownership.
Remember, whether you are selling your actual ownership in the company, or just passing on your role as CEO (or whatever title your business uses) it is important to ensure everything is planned out ahead of time. Proper leadership of a company will help ensure it can make it through the transition process and long into the future.
Make it a Formal Process
In most cases, it is not enough to simply have an idea in mind of who you would like to take over the company someday. It is necessary to have a formal business structure and succession plan in place that is referenced and updated on a regular basis. This will help to ensure all the key players in your company know the legal framework and focus on what they do best – running business. Even if a tragedy occurs and you suddenly can’t run the business, the transition to your successor should be relatively smooth so the business isn’t at risk.
Creating Your Succession Plan
If you need help with the legal aspects of business structure and/or succession planning, or you simply want advice on how to proceed with this important task, we are here for you. Our team has helped many New York businesses with this process, and we’d be happy to work with you next. Please contact us at 212-596-7039 to set up a consultation today.
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