In the US, there are over 5 million family businesses. These businesses contribute 57% of the GDP and employ 63% of the workforce, according to Family Enterprise USA.
Unfortunately, less than one third of these family businesses will survive into the second generation and roughly 10 percent will make it to the third generation. This is often due to the lack of proper business succession planning strategies.
Business succession planning is a strategy that lays out a plan for the business to move forward in the event of death of the business owner(s), debilitating illness, or simply a desire to sell or transition. A business succession plan generally uses estate planning strategies and each plan is custom tailored to that family, that business and that situation.
Many factors must be examined. There are issues of estate taxes, liquidity, ownership percentages, family disagreements, and capabilities of management. The plan will also affect employees and customers so it is vital that it is communicated that you have a plan in place to build security and confidence for those who may impacted.
For more information on business succession planning in the Baltimore area, please contact Stouffer Legal at 443-470-3599.