- Who We Are
- How We Serve You
- Research & Resources
- Client Login
Business Succession Planning
A large portion of our client base is made up of Entrepreneurs and Business Owners. Most work in the Technology community, but we work with other industry leaders as well.
If you are looking to sell your business or have already sold your business, it is worth a phone call to talk to us. We have the experience working with entrepreneurs and business transactions. A lot of financial advisors have never gone through this process, so don’t be fooled. Our experience and knowledge (view here) is key to your success.
If you are Pre-Sale or just considering the idea……….
Call us. We have done the research and diligence on pre-sale business succession strategies that should be considered even before you have a buyer in place. These strategies may have a huge financial impact on your taxes and estate.
We will also give you guidance on who you may want as part of your pre-sale team. It is important that you understand the roles of the different professionals out there and how they may be of benefit to you. We can help you coordinate a team and help the team collaborate for you (how we do that).
If you are Post-Sale………
Call us. Just like Pre-Sale strategies, we have done the diligence and research on effective post-sale strategies that may be beneficial to you.
After a smooth business succession, we can show you ways of preserving your wealth to build a legacy, limit your estate taxes and make sure you are well-taken care of during your lifetime.
Business Success Planning
The death of a partner or major stockholder in a business can have devastating effects on both the business and the deceased partner’s surviving family. The business is concerned with gaining control of the deceased partner’s interest at a fair price so that it can continue operations without interference from the surviving family members. The family members are most concerned with receiving as much money as possible for their interest in the business and for capital that may be needed for estate settlement purposes.
The Need for a Written Agreement
Absent a written agreement, the competing interests of the business and the family members could lead to major conflicts, litigation and possibly the forced liquidation of the business. A buy-sell agreement can ensure that the business interest of the deceased partner will transfer in an orderly manner to the benefit and satisfaction of all parties. With a buy-sell agreement in place, the stability of the business for it clients, employees and investors (or creditors) is more assured.
Key elements of a buy-sell agreement include a mutually agreeable sales price and terms of the sale. The agreement needs to be funded in order to ensure that the capital is available at the time of the death of a partner. Life insurance provides a cost effective means of creating the capital necessary to buy out the interests of the family and establish a reserve for the business to use to continue its operations.
Types of Business Owner Buy-Sell Arrangements
Entity Plan: Under this arrangement, used when there are multiple owners, each of the business owners has a separate agreement with the corporation or partnership as the entity. The entity, per the buy-sell agreement, will buy the deceased partner’s interest at his or her death.
Cross Purchase Agreement: Used in situations where there are two or three owners, a cross purchase agreement is established between each of the owners. At the death of one of the owners, the surviving owners agree to buy a proportionate share of the deceased owner’s interest.
Buy-Sell arrangements are a simple, yet effective way for business owners of privately held companies to plan for the orderly transfer of business interests where two or more owners are actively involved in the business. In addition to securing the needs of the surviving family members and ensuring the continuation of the business, a buy-sell arrangement also ensures each owner that there is a buyer for their business interest at a fair price.
Business succession planning involves legal, tax and personal financial issues. Guidance from a qualified attorney or tax professional is strongly recommended.