Business Succession Planning Requires a Multi-Disciplinary Approach

February 19, 2020

Family-owned and small businesses need to plan ahead for the owner’s retirement, death, or disability to ensure the business can move forward intact. This is typically a long-term strategy and ranges from simple to extremely complex depending on the individuals involved and the goals. Succession planning is a multi-disciplinary process. Its components include:

-Estate and Gift Planning: Minimizing the tax consequences of transferring ownership.

-Life Insurance Analysis: Making sure there is adequate life insurance coverage for debts and other financial needs of those left behind.

-Investment Advice: A financial advisor should review the asset allocation and risk assessment alongside the goals.

-Business Valuation: An appraisal of the business value as well as future income is a necessary component. Depending on the stage of the business, the valuation may be an income-based approach, market-based approach or cost-based approach.

-Corporate Structuring: The current entity type may need to be changed during the succession process to meet the needs of the stockholders, new leaders and/or retiring leaders.

-Shareholder Agreements/Stock Transfer: Clean transfer of title will require experienced legal assistance.

-Management Talent Recruitment and Transition Planning: Determining the future leaders may be a lengthy process. Ensuring the right leaders are in place, trained and ready to continue the business is an essential component of the succession plan.

Understanding the factors that drive your company’s growth and continued success requires planning and a multitude of disciplines converging together. Make Stouffer Legal a part of your business strategic planning efforts. Contact us today at 443-470-3599.

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