Have you considered what will happen when you eventually leave the company you’ve worked hard to build? Without a developed plan, you could be squandering your company’s hard-earned reputation, leaving a power vacuum that creates confusion, and even leaving money on the table when it comes time to sell the business. An experienced business succession planning attorney in Grand Rapids can help you safeguard everything you’ve accomplished and set up the next generation of leadership for success.
Contact SBS Law PLC for an initial evaluation with a Grand Rapids business lawyer. We’ll discuss your objectives for a business succession and explain the options available to you as you plan for the future. Don’t wait until it’s too late—reach out today.
Business succession planning involves developing legal and operational plans to transfer management responsibility and ownership of your company to another party, thus ensuring its stability, minimizing interruptions to its operations, and maximizing its value. Business succession plans can include:
A good business succession plan should also work in conjunction with a business owner’s other legal and financial planning strategies (including their estate plan, retirement plan, and tax plan) in order to mitigate tax liability, probate complications, or litigation arising from the transition.
As the owner of a successful, established business, the sooner you speak with a business attorney about your succession plan, the better outcomes you can achieve. Ideally, the planning process should begin several years before an anticipated transition, which will give you adequate time to develop a comprehensive succession plan, identify your successor(s), and guide your successor(s) through any professional development or management experience they’ll need in order to carry on leadership effectively. Many business owners make the mistake of waiting until they want to retire or move on from their business, or until an emergency, such as illness or disability, occurs that requires them to step down immediately—thus limiting the options available to them and putting at risk everything they’ve spent their career building.
Business owners have several options for passing ownership or management of their company to a successor. First, an owner may choose to conduct an internal transfer, which may involve:
Alternatively, business owners can pass their business on to an outside partner, such as through:
The legal team at SBS Law PLC can help you understand the pros and cons of each succession strategy and the process of transferring management duties or ownership interests under each type of plan. Armed with this knowledge, you can select a strategy that aligns with your wishes and objectives.
Business succession can involve a transition of management responsibility, equity ownership, or both. For example, a business owner may want to pass the management role on to a successor while retaining equity ownership of the company in retirement. However, an owner eventually must pass on their ownership interest after death. Thus, a succession plan may involve a combined ownership and management transition or a transition of management duties followed by an eventual transfer of ownership via a transaction or through the owner’s estate plan.
Management transitions may also include a leadership development component to prepare a successor (such as a family member or key employee) to assume responsibility for running the company’s operations. A plan may include a gradual transfer of management responsibilities to help a successor “learn the ropes” while the owner remains at the company to provide counsel and make the final call on major decisions.
Business succession can also involve valuation and tax considerations for owners. An owner should obtain an accurate valuation of the business to ensure they receive maximum value for the work they have put into building the company, especially if they’re passing the company to a key employee or outside buyer. Another reason to get a business valuation is that the structure of a succession plan can have consequences regarding capital gains, gift, or estate taxes. Owners can work with business appraisers to obtain updated fair market valuations for their companies.
One of the few certain things in life is its uncertainty, which is why a comprehensive succession plan should also include contingencies to ensure continuity of business operations in an emergency, such as the sudden illness or death of the business owner. Emergency provisions may include the designation of an interim manager to oversee daily operations pending the owner’s return or transfer of the business, or springing durable powers of attorney to authorize an individual to carry out the succession plan in case of the owner’s sudden permanent incapacity.
It can be daunting to think about what will happen to your business once you pursue other opportunities, retire, or pass away. However, a knowledgeable business agreements attorney in Grand Rapids can help you face the future with confidence. Turn to SBS Law PLC for help crafting a succession plan for your company because:
Don’t leave the future of your business to chance. Instead, get the help you need to prepare a thoughtful and thorough succession plan aimed at protecting what you’ve built for many years to come. Contact SBS Law PLC today for a confidential consultation with a Grand Rapids succession planning lawyer and get the experienced advice you deserve.
