What is business succession planning?
Stated simply, business succession planning is the process of protecting the owners of a business by planning for the incapacity or death of an owner. The succession plan should address (i) the identity of the successor manager(s) of the business, (ii) the identity of the successor owner(s) of the business (perhaps most importantly, by identifying permissible successor owners, we identify those who cannot be successor owner(s) – creditors and other outsiders), and (iii) treatment of the interest of a departing owner, whether the departure is due to retirement, disability or death. The advantage of putting a plan in place to deal with inevitable events is that we limit (or eliminate) the unknown and can reach mutual consensus before a potential crisis.
Business succession is a component of estate planning which is extremely important for individuals and families who own a business or an interest in a closely-held business. Business succession planning can often be broken into three components: ownership, management, and taxes. The failure to properly plan for business succession causes almost 70% of family businesses to not survive the transition from founder to next generation.
Eventually business owners face the challenge of either selling their business or transferring ownership to a family member. If you are considering business succession, the Zidd Agency can help you develop and implement a personalized succession strategy that maximizes the tax advantages for all parties involved while helping you reach your personal financial objectives. Working closely with us, the Zidd Agency will provide help and guidance throughout the entire succession process to ensure a smooth transition when you decide to transfer ownership.
