Many owners of family businesses are so busy running their companies that they never get around to making formal arrangements to pass on the business to the next generation or to other partners.
A business will is far more than a legal document designed to transfer assets upon the death of an owner or partner. It is a comprehensive estate planning tool that can include everything from management plans, and other documents necessary for a company’s continued operation and future health, to shareholder buy-sell agreements.
When developing a succession plan for your business, you must make many decisions. Should you sell your business or give it away? Should you structure your plan to go into effect during your lifetime or at your death? Should you transfer your ownership interest to family members, co-owners, employees, or an outside party?
After years spent launching and growing your business, the day will finally arrive when you can sit back and enjoy the fruits of your labor. But, just as starting your business involved hard work and planning, the process of exiting your firm can be a long and challenging process.
If you’re a small business owner, you’ve invested a great deal of time and effort into building your company. With day-to-day demands, it may be difficult to imagine your eventual transition into retirement. Yet, if you want to build personal financial security and ensure business continuation, it is important to plan ahead.
One of the more difficult challenges facing a business owner is the formulation of a viable and economically beneficial exit strategy at retirement. Typically, the main goals of such an exit strategy are: 1) to identify a qualified buyer; and 2) to receive fair compensation for the business, which would, in turn, translate into a desirable retirement income.