For a business owner, the following statistics should be alarming: only about a third of family businesses are successful in making the transition to the second generation and only 12% of businesses are still running in the third generation. So much effort and cost goes into building and running a successful family business. Don’t ignore what will happen to your business after your lifetime.  Proper planning can be put in place so your business can continue to operate and provide benefit to your loved ones, even if you are no longer able to run it.

If there is no succession plan, the business will be passed down to the successors of your estate. These heirs may or may not be in a position to continue running the business. Suddenly, a surviving spouse finds him or herself owning the family business with their children or others who will not be cooperative. Tension among relatives or between those who are more active in the business and those who are less involved but with equal ownership interests, can grind a business’s operation to a halt.

With a succession plan, the family business can pass according to your well-considered wishes. Typically, succession planning involves either devising an ownership and control plan for retention by family members, or engineering a buyout of the family’s interest by other shareholders. The Firm’s Estate Planning and Wealth Preservation Group works with the Business Representation and Transactions Group to devise a plan that will work best for your business and your family.

Buy-Sell Agreements involve giving current shareholders or key employees the opportunity to buy a larger stake in the business via a buyout. A fair valuation of the ownership interest is determined through a previously agreed upon valuation mechanism and then paid to the departing owners. Mechanisms to fund this “buy out” are also implemented.

Don’t leave your business without a succession plan. With advanced planning, you can layout procedures to be followed, appoint your chosen successor, and put your business on a path for continued success. Call the Miller Law Firm, P.A. today at (864) 527-0413.