Why Does Business Succession Planning Matter for Company Owners?
Business succession planning refers to a conversation and set of strategies around the financial and logistical decisions about who will take over your company at the time you pass away, suffer a disability, or retire.
No matter how your exit from the company comes about, it’s much easier to have a strategy in place for succession planning well in advance.
Far too many business owners overlook this process and instead leave their key employees or family members to sort it out. This not only makes things stressful for those people, but could even impact the company’s overall success.
How Can You Create a Business Succession Plan?
To create a succession plan, one of the first and most important steps is to identify an ideal successor to take over the business and then identify the most appropriate selling arrangement and follow it up with documents that enable that selling arrangement and transfer to occur.
In some cases, the ideal successor will already be an employee in the company or will be a family member who is interested in taking over the role you currently play in the business.
Can You Assign Ownership of Your Business in a Succession Plan?
However, it’s important to recognize that many family-owned businesses do not make it to the next generation, so it’s ideal to consider other talent inside the current workforce or whether outside talent can be identified to take over the company. There are five major ways to transfer ownership of your business in succession planning.
These options include:
- Selling ownership interest back to the company for multiple owners
- Selling this to an entrepreneur outside of the company
- Passing ownership interest to a family member
- Selling ownership interests or shares to a co-owner
- or selling a business to a key employee.
To discuss which of these is most applicable or recommended for your individual situation, contact a trusted D.C. business succession planning lawyer.
Get Professional Help from a Seasoned Attorney
If you operate a business, it’s important to have a plan in place. Ensure that your business has the legal backing it needs to thrive by securing the legal counsel of an experienced business planning attorney. Rely on attorney Clifford M. Cohen, who has more than 35 years of experience, to provide thorough and insightful guidance through this complex process in Washington D.C. and Maryland. Call (202) 895-2799 or complete our contact form for a free consultation.