Key Questions with Passing Down a Family Business
You have worked hard to create a successful business and an enviable life for your family. Now is the time to ensure you have created the right business succession plan. At Cavallo & Cavallo, we have worked with clients throughout Westchester County who have built companies in a variety of industries. Marrying our legal knowledge with sensitivity to the practical challenges of being a business owner, we provide the highest level of service to our clients. Reach out to schedule a consultation with a business succession attorney in Westchester.
Questions for Business Succession Planning
Proper business succession planning is so crucial that we encourage clients to immediately get a jump start on the process. Even if you are in the prime of your business career, you never know if a tragedy can strike and you end up incapacitated. Having a plan in place now is a worthy investment.
Some considerations you can discuss with your attorney:
- Are any of your children an appropriate successor? This question is harder to answer than many clients imagine. You might automatically say, “Yes,” without ever having discussed the matter with your child. Some children will have no interest in running your business, while others might simply lack the skills or knowledge.
- Would a promising employee be a better choice? Not every successor must be a relative. You might also groom a current employee. However, you still need to engage in deliberate planning, including attempting to find out their interest. You will also need to consider the need for separating ownership from control if you hope to pass ownership to children.
- How will you value your company for sale? In some situations, a sale is the best succession plan. You should talk about how to value the company, which is often complicated when you have sensitive client records or trade secrets.
- Do you intend to continue to draw income from the business while retired? Some clients envision the company or business continuing to provide a means of financial support in their Golden Years. You will need to ensure the correct documents exist. Further, if you are depending on the income, you must ensure an appropriate successor takes over so the company does end up insolvent.
- Can your spouse sell their interest? You might still have shares of the company, which you will leave probably to your spouse. You need to think through what will happen in that case. Will there be a buy-sell agreement in place?
This list is only the tip of the iceberg. Succession planning for business owners is a thorough process which considers possible contingencies and ensures continuity, which is the bedrock for success. At the same time, we realize that no two businesses are the same, so business succession planning calls for a targeted approach.
Speak with a Westchester County Business Succession Attorney
Cavallo & Cavallo has created business succession plans for many clients and can help you begin thinking through the process. Contact us to schedule your consultation.
Source:
hbr.org/2021/07/do-most-family-businesses-really-fail-by-the-third-generation
