Business Succession Planning involves far more than just deciding who will take over a business. More often than not, in fact, it involves business, financial, and personal relationships. It involves legal knowledge, but also counsel on personal goals. That’s why working with attorneys who are skilled in the law and experienced in how to best approach this planning process is essential. The attorneys at Nicolosi & Associates are more than just experienced attorneys; they have built, operated, and managed their own businesses. They have planned their succession and they understand the issues and choices.
Our professionals will work with you to understand your particular situation and explain the legal options you have for passing your businesses operation and ownership to your designated successor(s). There is no one-size-fits-all in this process, it is not a simple process, but our attorneys will help you through every step of the way so that you can be assured that your business will continue to thrive long after you have moved on.
There are various things to consider in creating such a plan. First, how will you determine what the business is worth? If your plan includes a sale of your interest in the business, you should set up a standard by which to measure the value of your interest to ensure that this determination is made fairly and in accordance with your wishes. Good relationships often become strained over financial issues, and having a set valuation standard in place can help to avoid potential disputes.
Next, do you have a life insurance plan in place for your business? Many businesses take out life insurance policies on their owners or partners to prepare for unexpected deaths. Typically, a business will pay the premiums and will be entitled to use the payoff under the policy to buy out the deceased owner or partner’s interest in the business. Generally, it is agreed in advance that in the event of death, the business will have an option to purchase the deceased owner or partner’s interest in the business. Effectuating such a plan will avoid the need to set up a valuation method as discussed above, because the owners and partners are agreeing in advance that the life insurance payoff amount is a sufficient amount to purchase their interests in the business.
Proper business succession planning requires thoughtful consideration to ensure that the transition will run as smoothly as possible. Following a death, there will likely be unavoidable interruptions in the operations of the business, as when any important owner or partner moves on. However, with proper advanced planning, these interruptions can be minimized.
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