Succession and Transition Strategies

 

“If you don’t know where you’re going, how will you know when you get there?”  This is true in life and business… unfortunately, most business owners don’t have a clear and measurable plan for maximizing the value of their business when it's time to retire. Owners must identify their personal goals and implement a “transition strategy” which maximizes the value of their business and meets the needs of their future successors.

 

Our legal team is uniquely equipped to help with this all important process. Given your transition strategy, we’ll consider each of the available “transfer channels”- such as family transfers, management sales, charitable trusts, and third party sales. Each transfer channel has its own valuation methods,  transfer methods, tax consequences and risks. Our team will work with you to select the best transfer channel and customize the necessary tools to obtain your goals and the needs of the future successors.

 

The following key considerations need to be taken into account when creating a business transition strategy.

 

• Personal Goals: It’s your business,  who will be the next successor? Do you have family members or others who work in the business? Are you best suited to maximize the value through a third party sale?

• Management and Liability: Given the available transfer channels, how would your current management structure be affected and what are the  risks for you and your successors?  

• Valuation and Tax: What valuation method should be selected and how will each method affect the range of values? Also, what will be the tax consequences to the business and its existing owners?

• Owner Requirements: What are the existing requirements and conditions that must be met if there are “co-owners” or other interested parties? Do they have “rights of first refusal” or other preferences that will impact the selected transfer channel?

• Deal Structure: The “transfer method” and the required transition process will vary depending on the answers to the above considerations. There’s no “cookie cutter” approach-each method will vary.

 

Feel free to contact John Carter with questions or strategies related to business succession and transition strategies. He can also be reached at 248-785-3400.