Business succession planning is the process of planning for the eventualities of life through the use of legal tools and estate planning strategies. In many instances where there is a closely-held business or a family business, a business succession plan is an essential piece of a well-considered estate plan. A thoroughly reviewed estate plan can increase the likelihood that your family business will be protected from hostile takeover or other interlopers should you retired abruptly or face an unexpected injury or medical condition.
If you or a loved one is a business owner, there are essential decisions that must be made and planning that must be carried out to protect and ensure the smooth operation of the business in the future. For instance, one legal tool that can be utilized to protect your interests should your become incapacitated is the durable power of attorney. A durable power of attorney can allow you to set forth instructions as to whom will manage and control your affairs while you are incapacitated. But, if ownership is divided among 2 or more parties, an even more complex and nuanced discussion of potential business succession measures should be contemplated. The experienced attorneys of the Hoffman Law Office can assist you in protecting your company and preparing for its future endeavors.
Buy & Sell Agreements Are Essential Succession Considerations
A buy-sell agreement is contemplated, drafted and executed for the purposes of determining the types of legally binding recourse business owners have following a significant event in the business. These events could include the incapacity or death of a owner or the departure of a key board member or stakeholder. A thoroughly considered buy-sell agreement would address succession issues and other concerns including:
- How a business owner can divest a share of the business.
- Contemplates whom would be considered an appropriate and qualifying replacement owner.
- The circumstances in which the business is permitted to dispose of an ownership interest.
- The business’ right to purchase shares prior to disposition, if any.
Spending the time to plan for the vagaries of life & business today can be an essential step in protecting your closely-held company and increase the likelihood that it will continue to run smoothly should a significant event occur.
Family Business Planning can Protect the Company You Have Built
In a number of instances, a comprehensive business plan can include the transfer of assets and business holdings into a newly formed business entity. This type of family business plan has a number of benefits including those in:
- valuation
- tax considerations
- asset pooling & protection
- centralized asset management
- preparing for the next generation’s management
Family business entities, such as a family limited partnership or family limited liability company, can offer potential tax savings because of valuation discounts and because potential future appreciation is transferred out of the client’s estate. However, because of the significant tax advantages provided to family business entities, they are subjected to a high level of scrutiny by the Internal Revenue Service (IRS). Therefore, it is absolutely essential that the entity in question is needed for a real business or non-tax purpose. The Hoffman Law Office can assist you with these business and tax law concerns.
Planning for the next generation of management is essential if you hope to maintain the goals and values of your family or closely-held business. Failure to consider this important items and factors can lead to competition seizing on your organization’s transitionary period. They may out-compete your business or attempt to engineer a hostile takeover of your company In short, leaving the future of your business up to chance is never a prudent course of action. One should always prepare for and take the legal steps necessary to ensure a smooth transfer of management, ownership and control.
A broad base of experience allows us to guide businesses in diverse industries
We understand that even within a certain profession or niche, every business has its own unique characteristics, needs and goals. Therefore we do not rely solely on our business and legal experience, but rather we take the time to discuss your business practices so that we can better understand your particular organizational goals. Businesses and industries that we can assist include:
- Doctors, specialists and medical groups
- Physical therapy offices
- Law firms
- Real estate developers
- Construction firms
- Engineering firms
- Marketing companies
- E-commerce businesses
- Architecture firms
- Accounting firms
- CPAs
- Lobbying firms
- Design firms
- Veterinarian offices
Working with an experienced attorney who can identify the potential challenges a business succession may bring and protect your company is important. By taking proactive and strategic steps, your business succession process can be streamlined and minimize the threat of internal conflict or external interlopers. To discuss how the Hoffman Law Offices can guide your business to its next stage call 800-897-3915 or contact us online today. We offer free and confidential initial consultations.