NOVEMBER 16TH, 2016: McAndrews Law Offices’ Estates, Trusts and Wealth Transfer Group is excited to announce our Business Succession Planning Services
Business Succession Planning Services
A frequent issue arising in our estate planning work is the transfer of ownership and control of a business owned by a client. Often, the business is a family business which has been created through the extraordinary hard work and personal sacrifice of an entrepreneur, often together with an entire family. As more and more baby boomers approach retirement age, issues related to business succession have become more acute and time-sensitive. McAndrews Law Offices is privileged to work in these matters of business succession collaboratively with Thomas F. Toscani, Esq., a highly respected colleague with decades of specialized experience in assisting families in navigating these sensitive and challenging matters. Our collective efforts can provide the necessary professional counseling to develop the necessary estate plan and legal structures to provide the best approach possible to transition a business in a manner which will serve the interests of all stakeholders.
Family–controlled businesses today account for 50% of the gross domestic product of the United States, and 35% of Fortune 500 companies are controlled by families. Family companies are responsible for 60% of jobs and nearly 80% of new jobs in the United States. Therefore, the success of these enterprises is critical to our national economy. On a personal level, the transfer of ownership and control of these businesses is essential to family harmony, economic well-being, and stability; as such, proper planning with appropriate professionals is absolutely essential to conduct a successful transition when current owners are approaching retirement or seek new challenges.
Unfortunately, a great many small businesses do not successfully transition to a second generation of owners and managers. The alignment of interests between current owners and successors involves many important factors, such as the balancing of financial returns, creation of a proper management structure which honors the interests of all parties, a dispute resolution process, and a variety of tax issues (income, estate, post-mortem, inheritance, etc.).
A multi-step process is necessary to successfully transition a business enterprise to successor owners and managers. Initially, it is essential that a collective vision with specific goals and objectives for the business and the stakeholders be created. Next, a decision-making process must be established with a proposed governance process for both the succession and the subsequent management of the enterprise; naturally, the succession plan must be in writing and properly communicated to all stakeholders. Third, both managers and owners of the enterprise must be identified, with both active and non—active roles for all current and future stakeholders properly identified. Fourth, tax implications for the owner of the business upon sale or transfer must be identified and properly managed, and must also consider issues related to death or divorce; these considerations should be designed to minimize taxes and avoid delays in the transfer of ownership in every circumstance. A part of this process will often involve the creation of a buy/sell agreement and the purchase of life insurance on key owners or managers. Finally, the process will culminate with the creation and implementation of a specific, final transition plan with the appropriate legal entities revised or updated (Corporation, LLC, partnership, etc.).
If you would like to discuss succession planning issues, our Estates and Trusts Department, in conjunction with Thomas F. Toscani, Esq., would welcome the opportunity to work with you to provide the best opportunity for a successful transition for the benefit of you and your family. Please call our office at 610-648-9300.