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Is a Lack of Business Succession Planning Threatening Your Company’s Health?

July 3, 2017

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

Have you spent a good portion of your life growing the viability of a business? If so, you can’t ignore the second step of a firm business foundation: creating a succession plan that carries on your legacy and your offerings. The right business succession planning lawyer can help you with this process so that you have a clear idea about the future. business succession planning lawyer

Far too many people and successful company owners never engage in the process of business succession planning. It might seem like the process of transferring the company is too far off the future to worry about these concerns but a sudden incapacitating event such as a disability or an accident could render you unable to make decisions in the business and force you and your loved ones to make a decision without maximizing all of the options.

Only 16% of firms have discussed as well as documented a succession plan, according to a Price Waterhouse Cooper’s 2014 study. The potential problems associated with lack of succession plan have not been effectively addressed or fully grasped by many different companies. Most family-owned businesses struggle to keep that family on status passed to the second generation which presents a unique concern that should be discussed directly with your business succession planning lawyer.

Many of the succession plans in place focus only on the financials, but the best succession plans will also consider a people focused combination of leadership development and succession management that helps to set up the business for success in the future. To learn more about the process of business succession planning and why having a documented plan can help you significantly, consult with an experienced lawyer today.

It’s Essential to Connect Personal Estate Planning and Business Succession Planning for Business Owners

April 11, 2017

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

According to data from the U.S. Census Bureau, in 2012, there are 27.6 million businesses closely held in the United States. Business ownership and entrepreneurship are critical drivers of legacy creation as well as significant wealth, but it becomes even more important for the individual to approach estate planning from their personal perspective as well their business. 

Owners of closely held businesses should commit to succession planning and looking ahead for exit strategies as well as estate planning as well. Up to 80% of business owners, according to research conducted by the Family Business Institute, indicated that they will be able to pass their company on to the next generation.
However, business succession statistics actually show that there is a decrease in business survival. Up to 64% of business owners in 2015, did not have any business succession plan at all, putting their family’s greatest source of security and wealth at risk. You need to consult with an experienced business succession planning attorney as soon as possible to identify all of the opportunities to minimize your risk and this includes looking at succession planning and exit strategies as well.

Fixing A Business Succession Planning Problem

March 20, 2017

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

Consulting with an experienced business succession planning attorney is strongly recommended in the event that you have connections to another company. If you want to transfer your business to a successor or if you are getting ready to retire or slow down, it is important to identify the appropriate business succession planning process to make things as easy as possible on your successors as well as to minimize taxes. Most people put this process off because they assume their exit in the business is so far off they don’t need to think about it. However, a sudden event like a disability can happen at any time.NJ business succession planning

There are several common problems associated with business succession planning. These include:

  • Treating children who will not be involved in the business fairly.
  • Transferring or selling the business to children without being hit by serious taxes.
  • Selling the business to a key employee if that individual has no money.

All these plans should be discussed well in advance with your business succession planning lawyer. Having the intention is one thing, but you also need documents ready to back you up if you decide to move forward with these plans. Legally valid documents can go a long way towards protecting you and helping you craft the transition most valuable to the business and to you.

Consulting with an experienced attorney and identifying potential strategies such as a profit-sharing plan, a qualified personal residence trust or an irrevocable life insurance trust may all be beneficial tactics for identifying a way to pass on the business in a smooth manner. The business can otherwise experience significant interruptions or even face financial jeopardy if the succession plan is not identified by a knowledgeable attorney well in advance. A lawyer can assist you with this process by sitting down and getting to know you and your individual business.              

Business Exit Planning: The Sooner, the Better

January 16, 2017

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

When it comes to looking years down the road in your business, one of the most important things you can do is to plan early. Starting now allows you to understand all the key issues while also building in time for training and flexibility.

Most business owners do not anticipate their own exit, whether it’s through retirement or other reasons, such as disability or divorce. This can prove problematic for the entire company, not just the owner. This is because the transition of a business should be planned well in advance with careful consideration given to who will take over the major management aspects of the company and other responsibilities.

A business owner usually has the mindset that he or she will be in the chief role for many years to come, but he or she may naturally tire of the responsibility or need to depart suddenly. Without any forethought, this can lead to scrambling to choose the right person. 

Aside from planning ahead for the transition of staff and the right training time for someone to step into bigger roles, there may be tax consequences related to how the business is handled, too. The critical documents for the business, like a buy-sell, may also outline what is and is not allowed. Anyone who could potentially be impacted by a business owner leaving should be thinking about the role of business succession.

It might seem like it’s too early to plan for departure, but it’s far better to accomplish these conversations earlier rather than later. No one expects to suddenly depart their own company, but failing to even consider the option could lead to conflict and confusion if the event does happen.

The right lawyer can help you understand the role played by business succession planning and why it should be incorporated into your business strategy as soon as possible.

How to Use Business Succession Planning to Help Your Firm and Your Staff Grow and Thrive

January 9, 2017

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

Meeting with an experienced business succession planning attorney can help you overcome what’s known as decision inertia. Meeting with a professional who has assisted others with a business succession planning process can minimize the uncertainty that may exist when it comes to thinking about your future. Helping you determine the desire for passing on the business can generate some difficult questions but also some important ones.NJ business succession lawyer

Many small businesses today struggle to create a comprehensive framework for developing their staff and yet this can be critically important in the perspective of business succession planning. Although you might be thinking traditionally about who will take over the business, it is equally important to understand how you will help develop and train the current staff that you have so that they can step into management roles.

Thinking about who will play these key roles down the road can be extremely beneficial for the firm as well as it minimizes confusion and uncertainty in the event that you have to suddenly exit. Remember that business succession planning is not something that comes into play only when you pass away or sell the business.

It could also come into play in a situation in which you are disabled and suddenly need to exit the business. This is why there are so many benefits to conducting your business succession planning now. Many people cannot anticipate accidents or disabilities that will have a significant influence on their personal as well as their professional life. Having a business succession plan that identifies talent now and works to help people grow into roles can be extremely beneficial.

Reasons to Have a Family Business Succession Planning Talk Now

December 28, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

Every family business should have succession planning as a key priority. Sooner or later every individual will want to retire but there are numerous other reasons why you may wish to step out of a business. Ensuring that you have enough money to retire on and that you have key procedures in place in the event that someone wishes to leave the business is important not just for the future of the company but also for your loved ones.

Think carefully about whether or not the business will be carried on by relatives. If this is the case, then it is more important to have a clear business succession plan to manage the issues including a smooth transition between the people who are working there now and future owners of the business. In any family business, succession planning can become immediately more complex as a result of the emotions and the relationships involved.

According to research, more than 70% of businesses owned within the family will not survive the transition from the founder to the second generation. In the majority of cases, the challenges that ultimately close down these businesses are family discord and taxes. However, setting up a meeting with an experienced business succession planning attorney now can help to address these issues and avoid them entirely. You may wish to consult with eth tax component as well as the potential for reorganizing the corporation and the strategies by which future business owners and managers will be trained in their new roles.

                                                                                                                

Key Things You’ve Got to Know for Small Business Succession Planning

December 22, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

No matter the size of your business, it’s important to think ahead to the future. This could be one of the most important ways that you protect your loved ones and also ensure a successful financial future for your business. What follows are several of the most important tips to keep in the back of your mind when it comes to succession planning. The longer you put off the process of succession planning with an attorney the harder it will be to take action.

Here are four tips you need to use to maximize your succession planning opportunities immediately. These include:

Here are four tips you need to use to maximize your succession planning opportunities immediately. These include:

  • Involving your family. No matter what vision you have for your future, make sure that your relatives are at least included in succession planning discussions.
  • Put together a team of advisors. Your dream team of advisors should include a business succession planning attorney, business partner, succession planners and even accountants to guide you through what could be a complicated process.
  • Include and exit strategy within your business plan. There’s a good chance that you already have a business plan identified for the next several years. Your exit or succession strategy should also be incorporated into this plan.
  • Identify and train a successor. One of the most common mistakes made in the business succession planning process is not getting the appropriate help and training opportunities for your business today. Thinking long range means you need to carefully consider who is within the company now who could potentially be trained to take on a more management role. This may even require bringing in outside talent if you do not currently have someone who is interested in this potential role.

Waiting too long could jeopardize the future of the company because the person you select may not have the appropriate background or training in place if something were to happen to you. Consulting with an experienced business succession planning attorney is often a first step towards success.

Wealth Attrition and Family Business Basics

November 21, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

It’s often been called the Holy Grail of family business succession plans: anyone currently in charge at a company expects that someone within the family will take over operations as the former owners, the parents, step down.

The reality is that it does not happen that often. Most family business owners have this as a goal and dream, but it rarely works out this way, making succession planning options all the more important for parents.

A recent study by Forbes found that although US families have better wealth attrition numbers than Europe, it’s hard for children and future generations to maintain or grow wealth the way their parents did. US families have a 60% wealth attrition rate for each generation, although the European stats show only one-third of the US rate. However, in Europe, up to 75% of family businesses with stay in the family for four or more generations. In the US, it’s rare for a company to stay within the family for even two generations. business succession lawyer NJ

This highlights why family businesses in the US need more in their succession plan than outlining which child will take over responsibilities. What happens if that child has no interest in maintaining the family business? If he or she has other plans and there’s no contingency? Businesses, and in particular family businesses, are exposed to big risks if no succession plan has been outlined, but it can also be a mistake to assume that children or other family members even want to step up to the plate with a family business.

Have a real conversation with children or other key family members about what role, if any, they’d like to play in the business in the future. It might be hard to accept that your loved ones don’t have the same passion and drive for the company, but it’s much better to know now than to expose the business or the family member to a situation that is not ideal.

There are many other options for handling a family business, such as finding in-office talent to rise up the ranks and take on leadership positions or even selling the company. In the midst of the day-t0-day management of the company, it can be hard to shift your mindset from that of dealing with what’s right in front of you and seeing the long-range vision, but it’s also important to incorporate this into your planning.

A family business requires a lot of work and dedication. If your loved ones don’t have the passion now, begin to articulate how someone else might ultimately take your place if something happens to you.

To discuss succession planning issues in greater detail, set up a meeting with a lawyer.

Why Your Choice of Entity Matters for Business Succession & Tax Purposes

November 17, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

When you start your business, it’s easy to get overwhelmed with all the decisions you have to make, but this is no excuse for overlooking the power of choosing the right entity. When it comes time to sell the business, what you chose as your entity can make a big difference. Read on to learn more about how these choices will influence you. 

  • Sole proprietor: The classification of gain or loss is important here because it depends on the nature of the assets. You may also need to factor in whether you’re passing on the business to family members or someone else and make sure there’s a training plan in place.
  • Corporate shareholders possess a capital asset- stock, meaning that when it’s sold, there’s a capital gain.
  • Partnerships and LLCs will typically report ordinary income when the business is sold in addition to capital gain

Planning for a future that seems far off is not always easy, but a business succession planning lawyer can help. There are several steps you should take to protect yourself:

  • Review your buy-sell agreement and any other business agreements
  • Consider the cash value of the business and how this might influence a sale
  • Plan for a clear transfer of ownership if you have a family business

Having these items documented well in advance and considering both the succession and tax implications for your business is critically important. Don’t make the mistake of overlooking these.

 

Entrepreneur Estate Planning Tips

November 14, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

Many entrepreneurs have one thing in common: they tend to like to do everything by themselves, at least when the company is started. Over time, however, what tends to separate the extremely successful from the barely surviving is being able to tap into other resources and surrounding the entrepreneurial journey with a team of professional advisors who help him or her implement short and long-term strategy. 

Entrepreneurs have unique estate planning needs. In addition to thinking about the future of their own assets, it’s equally important to consider the future of the business, too. Finding the right estate planning attorney can have a big impact on an entrepreneur’s ability to plan. There are five primary tools that most entrepreneurs should consider when putting together their estate and their long-term business planning. Meeting with the right lawyer can help to identify the best opportunities to move forward with estate planning while keeping the future of the company in mind as well.

The top six tools that can help an entrepreneur include:

  • A trust
  • A buy-sell agreement
  • A trust
  • Power of attorney
  • A will
  • A succession plan

In many cases, the estate planning for an entrepreneur may be infused with both individual and business plans. This is why it’s so crucial to identify an attorney who understands that and works to create a comprehensive and personalized plan for the business owner. Having to suddenly exit the business due to incapacity, for example, can raise a lot of questions for the entrepreneur about who is empowered to make medical or financial decisions for the business owner but also how the company will be handled, whether it’s a short or long-term absence.

Entrepreneurs frequently pour their heart and soul into founding and growing a company. Determining the most appropriate way to protect it is equally important. Make sure you identify an estate planning lawyer with experience helping individuals as well as business owners with estate planning and succession planning needs. The right lawyer can give you a lot of peace of mind about the future.

Don’t Forget the Founder’s Role in Business Succession Planning

November 2, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

Without a proper business succession plan, the very future of the company is in question. The entire business could even tank due to a lack of a proper succession plan. Without some guiding documents in place, new owners and family members may be stepping in to a very complex situation and may end up in conflict with one another. It’s important to meet with an attorney who has extensive experience in the realm of business succession planning to start with to ensure a comprehensive approach towards protecting individuals and the interests of the business. 

Although to some extent certainty and clarity should be incorporated into your estate plan, the owner might assume risks in order to help grow the business. The owner may even have a concept in mind for when he or she will elect to leave the business. However, there are so many different events that can disrupt this plan. If you have not planned for some adaptability in the business succession plan, all the hard work can go up in smoke.

One key aspect to remember in any business succession plan is the transition of the owner. How will he or she maintain an operational role or compensation during the succession process? If the clients intend to remain with the business because of their connection to the owner, this transition period could lead to a lack of trust. Any buyer will want to be able to minimize the potential impact of fleeing or unhappy clients. One way to address this is by using an earn-out structure for the owner’s exit.

If you have more questions about the business succession planning process, reach out to an experienced lawyer today.

 

 

 

 

What Business Owners Should Consider for Estate Planning

September 22, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

After putting in all the hard work to get your business off the ground, it can seem like a good time to take a break from planning. After all, who wants to think about the end when you’ve just made it to the beginning? The ones most likely to skip out on estate and business succession planning are young business owners who consider themselves to have few assets.

Although it might seem counterintuitive, taking the steps to conduct estate and business succession planning early on is strongly recommended. Business owners forget that assets like retirement plans and group life insurance can be classified as part of your estate. This means that if someone dies without a will, state laws determine where those assets will go rather than the former owner. This can lead to unintended outcomes, like a young business owner’s parents, receiving all the assets. 

Bear in mind that death is not the only reason someone might exit a business. It’s essential to partner with an experienced attorney to discuss what happens if a partner or a shareholder exits the business due to disability, for example, all the same questions will be raised about transferring management or other responsibilities. Without proper planning, there can also be unintended tax consequences, too. Having a clear plan to outline what should happen when any partner or essential stakeholder needs to step out of the business suddenly.

Without a proper plan, all of the hard work that went into establishing and growing your business can come to a screeching halt. This can be extremely problematic and can even impact the company’s ability to get things organized quickly.

Ready to get a plan in place for your company to minimize transition headaches? Contact an experienced New Jersey business succession lawyer today to learn more.

 

 

Do You Have an Authentic Business Succession Plan?

September 6, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

In order to appropriately engage talent and retain quality employees, your succession plan must be both transparent and authentic. 

 

Many things about the modern employment contract have shifted in recent years but employee commitment is usually still rewarded with development opportunities that will be beneficial for that employee’s career mobility down the road. For the most ambitious of the employees, the highest reward is usually the opportunity to have a position at the top of the company. Succession management is usually the biggest tool that organizations use in order to vet candidates who may be capable of taking on these top positions. This usually happens with the practice of promoting from within.

 

This can help to attract strong talent to your employee pool to begin with because it gives a clear prescription for development. In order to advance to higher positions, employees know that they must show personal growth, deliver results and master certain skills. While succession plans may be present in your current business, the degree to which this plan is actually followed can vary tremendously. Recent studies have found that even those with a well-developed succession plan often lack the implementation skills to carry out what is stipulated.

It is important to think of your succession plan for the business as a living document. The guidelines and suggestions within it must be followed and reviewed on a regular basis in order to make the most out of the plan.

Business Succession Planning Can Support Your Employees, Too

August 29, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

There are many different reasons to approach the subject of business succession planning. It gives you greater peace of mind and clarity about the future and can make things easier for family members who may need to become involved after you depart the business suddenly. Unfortunately, however, business succession planning is essential for your employees as well.

If staff members do not feel as though they are being valued in the company or being prepared to take on a bigger role when the transition time comes, they may begin to look for other opportunities. This can be a critical sign that business succession planning is necessary. A continuity plan is valuable for clients but also for employee motivation and retention. Effective business succession planning is about a multi-pronged approach.

Hiring loyal and talented employees from the outset can be essential, but an entrepreneur is responsible for treating these employees right and making them feel a valued member of the team. They should also be included in training and incentive programs that help to support their growth to higher and higher roles. If an employee feels as though there is no growth opportunity, then they may consider searching out other employment options. This can be devastating when a business owner who must suddenly depart the business has a choice only of inexperienced employees currently on the payroll because older and more experienced employees have chosen to depart due to lack of appreciation. If you are ready to initiate the succession planning process, reach out to a New Jersey business succession planning attorney today.

 

Succession Planning and Trusts in Estate Can Help a Business Survive After the Loss of a Loved One

August 3, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

You might not initially think that you have much in common with the Prince estate, but as a business owner you have more than you likely realize. Prince left behind no will or no plan, meaning that he created a lot of legal questions for his multi-million-dollar legacy and empire. Putting together a business succession plan is essential, if you intend to protect your business interests after you pass away.

business

In some families, for example, only one child wishes to be involved in the future business. With no estate plan, all of the children may automatically receive an interest in the business that they are not necessarily interested in. With the trust, however, the individual who has the business has the opportunity to funnel this business to the interested child. This is usually the child who has already working in the business. That inheritance can be offset to other children with other assets. Cash and a house may be some of the most common assets, but this allows the business to pass on to an invested child who wants to remain involved for many years to come.

The probate process can be lengthy and the sudden departure of a key individual in a business can present many unique legal challenges and problems. It can be difficult to identify a successor if this process has not already been done with the business succession plan. Make things easier for your business and your loved ones by consulting with a business succession planning attorney as soon as possible.

Checklist of Questions That Every Business Owner Needs to Ask

July 5, 2016

Filed under: Asset Protection Planning,Business Succession Planning — Neel Shah @ 9:15 am

There are several different questions that you need to ask in order to ensure that you have protected yourself against risks and engaged in proper planning. shutterstock_189579146

Do All Owners of the Business Have an Updated Buy-Sell Agreement?

A buy-sell agreement determines what happens to ownership interests and the business if they need to be transferred due to a disability, termination of employment or owner’s death.

Have You Reviewed Your Legal Structure at Least On an Annual Basis?

Whether you’ve been in business for awhile or whether you’re new to the game,] make sure that your business structure is always set up in the most advantageous manner.

Has a Succession Plan Been Outlined?

You need to ensure that the ownership and authority have been outlined when a business owner transitions and it is passed on to someone else.

Is There an Emergency Management Transition Plan/Procedure in Place?

Make sure you have a plan in the event that a key individual suddenly becomes incapacitated, unavailable or deceased.

Does Your Business Have Regular Shareholder’s Meetings and Annual Directors Meeting?

You should always schedule these in order to update the stock book and corporate minute book.

Do You Have Updated Contract Forms that Have the Clear Business Terms and Conditions

These forms should have clear terms and conditions aligned with protecting your business.

Have You Reviewed Any Potential Liabilities, Litigation Risks and Obligations?

The business should have a plan to guard against exposure, but you should also make sure that individual owners also have their own personal asset protection plans.

Do You Have an Employee Handbook?

Your employee handbook should include key terms about disabled employee rights, family medical leave, law changes involving discrimination, social media and sexual harassment.

When Hiring Employees, Do You Have Them Sign Noncompete Agreements, Non-Disclosure Agreements & Confidentiality Agreements?

This can be an excellent way to protect the business you have worked so hard to build and to lay ground rules from the outset of working with a new employee.

Is a Business Executive Compensation Plan in Place?

One of the best ways to reward loyalty is to ensure that you have rewarded retaining key employees and enhancing their commitment to your company.

Are Business Owners Thinking About Growth?

Are you thinking about acquiring other companies and growing your company in this manner?

Are you Thinking About Selling the Business to Someone Else?

If you are thinking about ultimately selling the business, or if you have received increase from someone interested in purchasing the business, there are many different things you need to prepare for.

Have Any Owners of the Business Expressed a Desire to Leave or Separate?

This is one more reason why you need a business succession plan in place.

Do Business Owners Also Have Ownership in real Estate Where the Business is Located?

Make sure that you have reviewed the recent developments and changes in the law and ensure that the legal structure of real estate ownership has been analyzed recently.

Have You Developed an Asset Protection Plan to Minimize Your Exposure to Liabilities?   

Make sure your plan covers all potential liability exposure. You can discuss this further with your New Jersey asset protection protection planning attorney.

 

Planning for Business Succession and What You Need to Know About Sales

June 21, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

Any number of major companies can illustrate the importance of business succession planning. Succession planning issues always make for interesting news subjects especially when they involved major companies like Disney, General Electric or Berkshire Hathaway. Although Disney had what they thought was a clear plan in place to replace their CEO, the individual intended to replace Bob Iger announced suddenly that he was leaving the company as well. NJ business succession planning

It looks like from the perspective of analysts that Disney may need to extend the contract with the current CEO while they look for an appropriate successor. and of course, it comes as no shock to anyone that the company’s stock value took a drop this last week. Succession planning is just as important for smaller and family owned companies as it is for these major companies. Whether you plan to transfer your business to a family member or an outsider, it will more than likely involve some kind of formal transaction. Research shows that 34% of business owner respondents, in fact, have received a formal offer for their business but 88% of these decided not to sell saying that it simply wasn’t the right time.

Among business owners who had not yet received an offer, according to an RSM Middle Market Leadership Council survey, 22% believed that they were likely to sell in the future, raising the question about how they would transfer ownership if they did follow on this track. There are several different questions you need to think of when conducting your business succession planning. These include:

  • Will you, the owner, have sufficient income or assets outside the business entity if you pass on to a family member?
  • Will you be able to achieve your necessary retirement and estate planning needs if you sell to an independent buyer?
  • What role would you like to play in the business after it is sold, if any?
  • What after-tax proceeds do you need to count on to meet your charitable estate planning, lifestyle, and other goals?

Meeting with a New Jersey estate planning attorney can help you accomplish these goals and more.   Contact us today to learn how our attorneys can help. Set up your meeting by emailing info@lawesq.net.

 

How Business Succession Planning Can Help with Smooth Transitions

June 15, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

It’s imperative to think carefully about replacing any high-level employee in your business, but this is especially important as it relates to a CEO. There are major risks associated with not having a long-term strategic plan for replacing someone at the head of the company. Succession planning should be discussed early although many companies fail to accomplish this goal until they have learned the value of doing so by speaking with a business succession attorney or until the company has gone through a rough transition period.

Take a lesson from the spice company, McCormick. They use many of the same tools that other companies do, including job rotations, a long-term strategic view and regular assessments for all senior executives. This is largely due to the fact that the sudden death of a prior CEO and health issues that forced the current CEO’s departure from the company.

Planning for succession is as much about deciding the future direction of the company as it is figuring out what plans and people you have in place to direct that transition with minimal negative impact on the company. With training and advance preparation, the next generation of leadership in the company should rise to the occasion.business idea

According to a recent study conducted by the Wall Street Journal, 55% of companies felt that they were only somewhat or not at all prepared for the departure of a CEO as a result of an emergency. All too often, boards of directors don’t consider replacing a CEO until a year or two before the individual currently in the role is planning to leave, but at that point in time it’s too late to develop someone else to take over the role. It is imperative to plan ahead for a smooth transition in order to allow the best possible chance of success.

Ready to talk succession planning? Contact our office at info@lawesq.net to learn more about your options and suggested next steps.

                                                                                                                                                                                           

Boosting Your Company’s Value with Business Succession Planning

June 7, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

One of the most common myths about business succession planning is that all you need is a buy-sell agreement. There’s no doubt that a buy-sell agreement may be an important component of your overall strategy, but it’s unlikely to be the only piece.

There are plenty of reasons to have a business succession plan in place as soon as possible, including:

  • Avoiding lack of continuity to impact clients
  • Having a clear vision about how the company can be sold or divided in the event of a sudden crisis
  • Protecting an owner’s equity
  • Preparing the next generation of leaders to step up to the plate

Your succession plan should be comprehensive and it should be a living plan. It’s not enough to have a basic idea about how things should happen in the event that an owner unexpectedly or even willingly departs the company. The best-laid business succession plans also have a systematic expectation regarding how ownership will be transferred. This includes a backup plan if the initial strategy is, for some reason, unachievable. business succession planning NJ

 

One benefit of succession planning that many owners don’t fully realize is that it can be used to lower risk to allow growth, ultimately boosting the company’s value. One key issue that can be difficult to calculate for the valuation of any business is known as the company’s “goodwill.” The extent to which this can be transferred to future owners will significantly impact the value of the company. If you approach succession planning with the right frame of mind, this should include transferring top clients to the succession team so that client confidence can be maintained.

 

In order to get the most out of succession planning, it should be completed as soon as possible and be something that leaders return to over time if circumstances change. To get started today, contact an experienced New Jersey business succession planning attorney.

What Mark Zuckerberg Can Teach About Business Succession Planning

June 1, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

The business succession planning strategy of Mark Zuckerberg could have important ramifications for individuals who are approaching retirement and thinking about whether or not it is time to move on. business succession planning NJ

For example, Sumner Redstone, a multi-billionaire, is currently locked in an argument with trustees and his family over the control of his companies, Viacom and CBS. One of the key takeaways that Sumner and other individuals approaching retirement without a business succession plan can learn from Mark Zuckerberg is that there are key generational differences in the way that entrepreneurs build their companies.

In all situations, it’s in your best interests to avoid winding up in Redstone’s situation. You might assume that exiting the business is so far in the future that you don’t need to worry about it, but this is a mistake. In fact, there are many reasons that you may wish to exit or sell the business outside of death of an owner, and planning ahead for these can make for a smoother transition when the time comes.

A new survey from U.S. Trust found that younger business owners are planning to exit their companies and raising money in ways that are quite different from older generations even though many of their key concerns about eliminating or moving on from their role in the business are the same across generations. The younger generation deals with succession planning in very different ways.

Although two-thirds of current business owners do not have a formal exit strategy, and for the baby boomer population only 52% of younger business owners do not have an exit strategy in place. To learn more about how a business succession plan can help you accomplish goals for your company as well as determine when it time to move on in the future, consult with a New Jersey business succession planning attorney today.

 

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