“88% of current family business owners believe the same family or families will control their business in five years, but succession statistics undermine this belief. Only about 30% of family businesses survive into the second generation. 12% are still viable in the third generation, and only about 3% of all family businesses operate into the fourth generation and beyond.”
The article goes on to explain:
The statistics reveal a disconnect between the optimistic belief of today’s family business owners and the reality of the massive failure of family companies to survive through the generations. Research indicates that family business failures can essentially be traced to one factor: an unfortunate lack of family business succession planning.” (See article entitled ‘Succession Planning’ at www.familybusinessinstitute.com.)
Another way of thinking about a business succession plan is that it is a “road map” for your business that you can give to your business partners, your family, your employees, and even your customers. It includes everything from the very basic details about passwords to company bank accounts, key contacts for insurance, and key vendors, etc. to more important decisions about the future of your business.
(1) Who will run the company?
(2) How will the other responsibilities of running your company be divided?
(3) How will the stock in your company be distributed?
(4) How will company debt be retired?
(5) What kind of life insurance policies should be maintained and for whom?
(6) Have the buy-sell agreements been updated?
(7) How much control do the owners want to maintain after they retire?
(8) Are there key employees that need to be retained and how will this be done?
(9) Are there sufficient assets to pay the estate tax, equalize the estate, and still keep the business?
(10) How much money do the owners need to achieve their personal financial goals?
Our firm has helped families just like yours with businesses in a wide variety of industries work through these issues. In particular, we have the experience to handle the business, tax, and estate planning legal issues that arise in creating these plans, and we also have the relationships with experienced professionals in other related fields as well.
Call me today, and we can begin the process together. If you need help pulling your entire team together, I can be your “legal quarterback” to bring in the right people together to create a successful business succession plan for you and your business.