50
50 Years of Legal Experience
CPA since 1970
Lawyer Since 1973
30+ Years of Entrepreneurial Experience
Direct Attorney Access
Business Succession Planning for Ownership, Continuity and Transition
Legal strategy should reflect the transaction, the commercial relationship and the owner's long-term goals.
Succession Is More Than an Exit Date
Succession planning addresses who will own the business, who will manage it, how value will be determined and how the transition will be funded.
It should also address employees, customers, lenders, licenses, intellectual property, contracts and the owner’s personal financial plan.
Events a Succession Plan Can Address
- Retirement or planned sale
- Transfer to children or other family members
- Sale to employees, managers or co-owners
- Death or disability of an owner
- Voluntary withdrawal or termination of an owner
- Deadlock among owners
- Divorce, bankruptcy, or creditor claims affecting an owner
- Loss of a key executive or technical leader
Core Succession Documents
- Buy-sell agreements
- Operating agreement or shareholder agreement provisions
- Ownership transfer restrictions
- Valuation procedures and appraisal terms
- Purchase options and mandatory purchase obligations
- Life and disability insurance funding provisions
- Employment, consulting, and transition agreements
- Confidentiality, non-solicitation, and intellectual property terms
- Board, management, and voting arrangements
A Five-Step Succession Process
- Identify the owner’s preferred outcome and time frame.
- Review the entity, ownership records, and existing agreements.
- Evaluate potential successors, funding, and valuation methods.
- Prepare and coordinate the legal documents.
- Review the plan periodically and update it as the business changes.
Coordinate Legal, Tax, and Financial Planning
Transfers of business interests can create income, gift, estate, and other tax consequences. Funding arrangements may also affect insurance, cash flow, and the ability of the business or remaining owners to complete a purchase.
Arthur’s CPA background helps him identify issues that should be reviewed with the client’s accountant, valuation professional, insurance adviser, and financial planner.
Prepare the Business Before a Sale
A succession plan may lead to a third-party sale. Owners can improve readiness by updating governance records, documenting intellectual property ownership, reviewing contracts, and resolving ownership inconsistencies before a buyer begins due diligence.
Frequently Asked Questions
When should business succession planning begin?
Planning is useful long before the owner expects to leave. Early planning creates more options for ownership, funding, management development, and tax coordination.
What is a buy-sell agreement?
A buy-sell agreement sets rules for the transfer or purchase of an owner’s interest after specified events. It may address valuation, payment terms, funding, and who may become an owner.
Can a succession plan transfer the company to family members?
Yes. Family transitions require careful planning for control, fairness, valuation, taxes, management ability, and the expectations of family members who are not active in the business.
How often should the plan be reviewed?
A review is appropriate after major changes in ownership, value, financing, family circumstances, management, or tax law. Many owners also schedule periodic reviews.
Does a will replace a business succession plan?
No. A will may transfer an ownership interest at death, but it usually does not address management, valuation, purchase obligations, funding, or continuity in the same detail as business agreements.
Create a Plan Before the Transition Becomes Urgent
A succession plan gives owners time to compare options and prepare the people, documents, and funding needed for change.
Discuss your goals with Arthur and identify the legal steps that can protect the business and its owners.
