After spending the last 40 years building your family business into a million dollar company, it may finally be time for you to retire and move on. Planning for this day is not something you can do overnight though; you should begin thinking about this years in advance. This is called succession planning, and you may want to hire a lawyer to help you handle this properly because there are a lot of things you will need to think of.
Your Goal For The Business
One thing your lawyer will discuss with you is what your goals are for this business after you retire. One of the main goals you may have is that the business will continue operating under the management of your relatives. While you may hope for this, statistics show that only 30% of family businesses actually survive after they are transferred to another generation.
This is one of the reasons you should take succession planning seriously. Proper succession planning might be the only chance your business has of making it in the future. This is especially true if you were involved in the daily operations of the business. It can be hard for a company to lose the "glue" that holds it together, and this can often cause a company to experience problems shortly after the original owner leaves the business.
Questions To Answer
Succession planning involves a lot of different things, and these are some of the issues you will need to discuss with your lawyer:
Your lawyer will need to know these things before moving on. Once you have the answers to these questions, your lawyer will help you create a plan to begin the transfer of the business. During this initial stage of the process, your lawyer will also hire a business appraiser to complete an evaluation of the worth of the company.
Important Parts of the Plan
The succession plan created for this event should contain the following details:
Your lawyer will draft an entire plan that includes these details. At this point, you may want to plan a meeting for your family to attend. Your lawyer should be present at the meeting, and this will be the time when the plan is explained to your family.
Why This Matters
Because there is a good chance that your business will fail after the transfer, planning your exit strategy is vital. Most businesses that fail during second generation ownership have this problem because of a lack of planning, but they can also fail because:
Planning your exit strategy may not guarantee that the new owners will take over and run the business as you hoped for, but there will be a better chance of success with proper planning. A lawyer can help you with these steps and many others that will be required when you decide it is time to retire and pass your business on to your family members.
For more information, contact an experienced attorney at a local law office.
Share18 December 2014
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