How does succession planning differ between a family-owned business and other types of businesses?
In a nonfamily-owned business, decisions are generally made based purely on economics. In a family business, owners often make accommodations for the benefit of family members and do not necessarily try to maximize shareholder value. Additionally, family business owners need to consider the complexities and planning implications of death taxes as well as compensation for family members who are not active participants in the business. When should owners of a family business begin succession planning? As soon as possible particularly if there are multiple owners in the current generation. In that situation, a buy-sell agreement is a must. It is important to remember that succession plans will often change over time. It is ultimately a result, but it is as much a constant re-evaluation and analysis as it is a target. Succession plans need to be periodically reviewed and adjusted to meet any changes in the business and family dynamics. Members of the next generation who are under considera
