Charlottesville Business Succession Attorneys
Did you know that only about 30% of businesses make it to the next generation and only 10% make it to the generation after that? If you have invested your time, hard work, and expertise into creating and building a business and would like to see that business survive you, let the business succession planning attorneys at MartinWren, P.C. help you defy the statistics.
Every business should have a plan in place to cover unexpected tragedies that could impact the ownership or management of the company. As a business owner, if you were to die suddenly, become severely disabled, or undergo profound personal loss, it is important that you have thought through, and planned for, the possibilities to ensure your company’s management and operation continue and your family is well taken care of.
Most business succession planning is related to family businesses or closely held companies. A successful business succession plan will allow business owners to smoothly transition the management and ownership of their company to heirs or other successors. Whether you intend to keep the business in the family or desire to pass ownership on to a partner, it is important to develop a comprehensive business succession plan.
The reason businesses fail to continue into the next generation is not due to lack of desire by business owners. In fact, while only 30% of businesses to survive to the next generation, it is reported that 79% of small business owners want to retain the business within the family. So, why does this desire seem to almost always get thwarted? There are several issues that affect successful family business transitions.
- the lack of a clear, well-defined succession plan
- the failure to address the issue of who will run the business or control the company once the current management structure is no longer in place
- the failure to ensure that a surviving spouse will have a market for their ownership interest and sufficient lifetime income
Failing to take these three simple steps can threaten a smooth business succession by leading to family conflict, disunity, and disagreements between remaining owners or partners.
Some of the common issues that need to be considered in business succession planning are:
- Capital restructuring
- Buy/Sell Agreements
- Shareholder Agreement issues and covenants
- Stock Restrictions
- The creation of Family Limited Partnerships
Typically, wills and trusts are the most commonly used methods for transferring businesses, especially to family members. Business succession, however, can also be accomplished through buy-sell agreements, which allow the surviving partners of the business to purchase the shares of any partner who passes.
A comprehensive business succession plan will answer some critical questions and detail the precise procedures to be followed should the need for business ownership or management transfer arise. Business succession planning can be complex but, if properly executed by experienced business succession attorneys, it can minimize tax liabilities, preserve the company’s strength, provide the heirs security, and leave a rich legacy.
Business owners may choose to allow their children to take over ownership and management of the company or they may develop a plan that financially cares for their heirs while placing the company’s management elsewhere.
The business succession attorneys at MartinWren, P.C. represent individuals, companies, or families as they weigh the options for transferring ownership, assets, and responsibilities. For more information about establishing a business succession plan, please call Gregory M. Johnson or G. Raye Jones at (434) 817-3100 and let us help you execute or alter a business succession plan for your company. Our business succession lawyers at MartinWren, P.C. can develop a business succession plan to transfer management responsibility and financial assets, protect your business and estate from costly legal disputes, and advise you on the best course to direct future business operations and ensure your company’s longevity.