Far too often successful business owners never take the time to put a succession plan in place. If something happens to you, is everything in place?
- Who can access your company accounts to carry on the day-to-day transactions?
- Many business owners handle operations by themselves. Imagine the problem for your company if you became incapacitated. Even worse, at your unexpected passing, your company assets may be locked up and unavailable for immediate use without proper planning.
- Who, if anyone, is interested in carrying on your business when you can no longer do so?
- Many sole proprietors carry the same dream. Upon their passing one of their children will step up and continue to run the family business. In our evolving society where kids move far away and pursue their own interests, this dream is becoming less and less a reality. Identifying someone who has real interest in carrying on your business is vital to its continued success.
- How would someone pay for your interests in the company?
- In the event that someone has a genuine interest in taking over your company, some amount of value must be exchanged. Whether it is for the client list, the goods on hand, or the goodwill in the community, assets are needed to purchase your ownership. When owners wants to purchase shares from other owners, a “Buy/Sell” agreement prove useful. These agreements limit and set terms as to how a transition should happen. This document also keeps business partners from being forced to continue running the company in the future with kids, wives or other outsiders.
- How does the actual transition of your business interests take place?
- From a practical standpoint, insurance is often a great option to make sure the agreements can be “funded.” For example, if two business owners make a Buy/Sell agreement for a set price, a life insurance policy on each could be used to pay the purchase price in the future.
No one enjoys planning for their own death or departure from their business. However, at AlerStallings we fix issues before they become catastrophes. Have the conversation now, so we can make sure we know who will continue to carry on day-to-day operations, who will run your business long-term, and who will own the business. For planning with business succession, please contact your local AlerStallings attorney. We are delighted to help.