Do I need a business succession plan?

According to various studies, approximately 67% of business owners indicate that they do not have a business succession plan.  Despite this, every business owner ultimately faces a business transition (i.e., retirement, sale, disability, death).  Since the business often represents the single largest asset on many business owners’ personal balance sheets, its value can represent a lifetime of focus, energy, and work. This can make the time spent planning for a business transition a period of high stress and emotion.  For this reason, many owners find participating in a comprehensive succession planning process especially valuable. Business succession planning helps business owners to clarify their business transition and exit planning goals, objectives, and motivations, including identifying when and how they intend to transition from the business.

What is your firm’s business succession planning process?

Having helped hundreds of companies design and implement their respective business succession plans, we have found that following a comprehensive, holistic planning process can help owners to confidently plan and execute a successful business transition and maximize outcomes for all stakeholders.  Our business succession planning process consists of five sequential steps:

  • Identifying your business succession planning goals, objectives, motivations, and timeline;
  • Analyzing the business and help you to determine what’s it worth;
  • Identifing your business transition options (i.e., should you sell to an existing shareholder or partner, to a group of employees or to an ESOP, to an external third party buyer, or transfer it to family as part of your estate planning);
  • Reviewing deal structure, tax consequences, and funding options with you and all stakeholders; and
  • Executing/implementing the deal.

What is the typical timeline to design and implement a business succession plan?

The typical timeline to deliver a business succession plan is usually 90-days, 180-days, or 1-year or longer, depending on the number of transfer options being analyzed and whether a business succession planning assessment has already been completed.

How do you help to implement owner related goals as part of a business succession plan?

Implementation of owner related goals can consist of the following:

  • Creating an implementation time and responsibility schedule relating to shareholder’s personal estate, wealth transfer, charitable and tax planning.
  • Engaging the full advisory team (i.e., wealth advisor, wealth planner, trust officer, CPA or tax advisor, and specialist attorney, if applicable) and coordinating workflow across the advisory team.
  • Drafting basic and/or advanced trusts and filing gift tax returns, if applicable.

How do you help to implement business planning goals and objectives as part of a business succession plan?

Implementation of business planning goals can consist of the following:

  • Creating an implementation time and responsibility schedule relating to the business transition or sale.
  • Engaging the full advisory team (i.e., CFO, wealth advisor, investment banker, business appraiser, CPA or tax advisor, and M&A or specialist attorney, if applicable) and coordinate workflow across the advisory team.
  • Helping to build census among stakeholder groups (i.e., shareholders, board of directors, family counsel).
  • Drafting legal documents needed to document and memorialize the deal (i.e., purchase agreement, pledge and security interest agreement, employment contract, promissory (seller) note, and/or buy-sell agreement).
  • Helping the management team to develop a rollout and communication strategy for employees, customers, and suppliers post-transition or sale.

How do you charge for your business succession planning?

Unlike a lot of law firms, we do not believe in charging hourly fees for business succession planning, and, thus, do not charge by the hour (unless requested to do so by the client).  In most situations, we propose a fee based on the complexity of the business succession planning engagement and after gaining a better understanding of what legal documents may need to be drafted and the project’s dynamics (i.e., does the project contemplate our helping to build consensus among the ownership group, for example?).

What’s included in the business succession planning engagement?

In addition to our serving as project manager for all workflow with the advisory team, our flat fee includes our drafting certain trusts, agreements (purchase agreement, buy-sell agreement, etc.), and/or other documents approved by you in advance.

Call us today at (949) 482-1850 or contact us here to discuss your business succession planning needs further.  Learn more about business succession planning below: