Owning a family business gives an excellent opportunity to pass on wealth to future generations, but this is only possible when you have a clear business succession plan created and implemented in advance.
Many business owners rethought their decisions about their succession plan and retirement in the light of covid. Many of them were confronting these issues for the very first time. Research from PWC’s US Family Business Survey shows that only 1/3rd of business owners with a family company in the United States have a documented, comprehensive and clearly communicated succession plan in place.
There are dangerous consequences for failing to have this plan in place, such as limited tax planning opportunities or not having the right people in place to run the company. Most people do not anticipate leaving their family business any time soon but an exit that occurs too quickly or without proper training opportunities for the next round of leaders could have unfortunate consequences with your existing customers and clients.
This makes it all the more important to retain the services of an experienced and dedicated lawyer to create a business succession plan that works for you and your company.
A business succession plan is a living document that will have action steps and task items that will need to be addressed while you’re still in place in the company. This gives you the best possible opportunity to influence the future generations and to make sure that everyone who is stepping into the leadership roles will have the appropriate support and training to do them in the future.
There are several different areas of transition including the family, the business, the founder, management and ownership. Make sure that you’ve also considered the estate tax consequences before working with a knowledgeable lawyer.