You worked hard and took significant risks to establish a successful business. But, what will happen to your business after you are incapacitated or deceased with all the value that you have built up?
The sudden injury, retirement, or death of a founder or key partners is one of the greatest threats to the future of a successful business.
Issues such as sales, day-to-day operations, industry know-how, taxes, internal/family conflicts, and an inexperienced next generation will cause your business to fail in a fraction of time that it took to build it up.
With the support of an experienced lawyer at the Finity Law Firm, you can avoid all of these pitfalls by having an appropriate business succession plan established.
If you have any questions after reading this article, please give us a call for your FREE consultation.
What is Business Succession Planning?
Business succession planning is a set of strategic and financial decisions to smoothly transition control of a closely-held business upon retirement, death, or disability. It is typically a document or series of documents intended to dictate a transition of ownership by offering step-by-step guidance. The sale price and purchase terms are clearly defined if a purchase is involved relieving tension for the family of the leaving owner.
A well-crafted succession plan aims to benefit everyone: the departing owner, the business, the workers, and the successor.
The goal of business succession planning is to ensure that a business still has the right leaders in place should a transition happen quickly. Your business will not get a second chance by failing to establish an orderly succession plan if it does not change quickly after a key player leaves the business or passes away.
The preparation of business succession is a dynamic process that draws on many business disciplines. In their everyday operations, several privately-owned companies demonstrate strong professionalism and enviable profits but fail to prepare and complete the transfer to the next generation of leaders properly. Even the most advanced and competent business experts can get swept up in a maze of complex problems.
Importance of Business Succession Planning
You must work on developing a business succession plan if you own a company, even if you have a long-planned life ahead of you.
A business succession plan is essential in the following events:
- Getting divorced;
- Disability or incapacity,
- Retirement, or
In any family business, the family aspect may mean the difference between its success and failure during the process of transition. All common events that may cause a business transfer include retirement, injury, or death of the business owner.
A succession plan for business owners is a crucial estate planning document that allows for the continuing existence of a business in any major event.
Florida Business Succession Processes
Each business will face particular challenges and we will collaborate with you closely to resolve your individual needs and wishes.
Some of the steps in the process probably include:
- Long-Term Plan Creation: What is the long-term vision, mission, and goal of your business? What retirement plans for business owners are, or should be, in place? We help you recognize the targets and formulate a strategy to accomplish them.
- Deciding on the “right” succession plan: should future business ownership remain exclusively between members of the family (a retention plan) or should third parties, such as key stakeholders, shareholders, or employees (a buy-sell retention plan) allow for future control? We will advise on the best course of action and establish the strategy that best meets your particular objectives.
- Business Succession Plan by agreements to buy/sell. In the event of your death, disability, or retirement, a business succession plan decides what will occur to your business. Much as a person does not want to pass away without a will, a well-thought-out business succession plan for successful business owners could decide what will happen if they are no longer available due to death, retirement, or incapacity.
- Who is the Successor? It takes the responsive, impartial, and insightful advice we will provide to determine the best candidate to become the successor. We may also provide instructions as to who should hold what key positions within the business, how best to structure the business for legal, corporate, and tax purposes, etc.
- Preparation for the legal transfer of ownership and control: How long should the duration of transition to new legal ownership and control be? Will we now establish a leadership mentoring program inside the business? What should the future structure of ownership and management look like? Our attorneys are going to help direct you towards the right options for you and your business.
- Alignment of your Business Succession Plan with your Personal Estate Plan: It is important to carefully align your estate plan and business succession plan, especially in areas such as the power of attorney, disability plan, wills, and trusts. Our attorneys will work closely with you to ensure that all your strategies are coordinated and aligned, to mitigate the risk for possible dispute or litigation.
Florida Business Ownership
An ownership interest in a business is considered personal property under Florida law and can be transferred to the heirs or beneficiaries of a deceased as part of his or her estate.
This can create issues for any remaining owners of the business without a business succession plan in place, who may now have to accept the addition of a new owner without having had any input into the decision.
The divorce of an owner, member, partner, or shareholder may also have similar consequences.
What happens without a business Succession Plan?
Your business will probably die if you do so without a proper business succession plan. Also, not having a solid succession plan will likely make it unbearably difficult for you and your partners to handle the divorce, retirement, or incapacity of a partner effectively.
As a business owner, if you do not ask important questions and take steps to ensure that your business wishes are fulfilled while you are still able to do so, the repercussions can be catastrophic.
Consulting an experienced Business Succession Attorney
If you own a business in Florida, to protect the future of your business, it is important to consider creating a business succession plan with the assistance of our knowledgeable estate planning/business succession attorney.
We can provide the expertise and guidance required at the Finity Law Firm to help you create a powerful business succession plan specifically tailored to your business. Contact us today!
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