Business Transition & Exit Planning
Business transition planning is designed to help you retire with a sustainable income, as well as transition your business on your terms and timeline. It can include creating entities to protect your personal wealth and assets, consolidating entities to clarify your business functions and ease transitions of ownership, gifting, creating a sales plan, and creating a long-term family transition plan, including planning for any potential transfer tax (sale, gift, or estate).
It is important to proactively discuss tools for liability protection, transferring assets to third-parties or your family, providing for everyone in a fair manner, and generally transitioning to a sustainable retirement lifestyle in your future. The goal is to conduct an analysis of your needs and preferences, as well as advice regarding the different types of planning options to create a plan tailored for your peace of mind. This ultimately gives you control and reduces future costs and time of administering your estate.
Owning a business comes with a lot of responsibility. You are responsible for your family and your employees. When you are an owner rather than an employee, there are no guaranteed paychecks, insurance, or retirement benefits. Instead, business ownership brings the excitement and satisfaction of creating something unique. The daily work and excitement of running a business does not necessarily account for retirement income, transfers to the next generation of business owners, or providing equitably for non-business family members or friends. Our goal is to take the time to listen to you, and create a plan that protects your goals and values and eases the transition while avoiding costly legal fees that could diminish your business and estate after your death.
Frequently Asked Questions About Business Transition & Exit Planning
A business transition plan provides goals and strategies to transfer your business, allowing you to manage your future in a way that works best for you.
Every business has unique needs and requirements. That can include specialized location requirements, inventory, key clients, and/or employees. In addition to the unique needs and requirements of the business there are unique needs and goals of you as the owner. You may desire to transfer your business to family members, sell the business to third-parties or employees, and create an income into retirement. Each goal will require a slightly different plan for your future. Working with attorneys in combination with your financial planner and tax expert will allow you to determine your business goals and how to meet them.
You should be seeking to create and implement your goals. For example, determining if you want to sell to third-parties or transfer to family creates different planning options. Regardless of the ultimate ownership of the entity, your personal goals will also factor into the plan. For example, will your business support you retiring by your mid-fifties, or will you need work to longer? Do you want to keep your business longer? If you sell the company, will the price allow you to invest and live off the profits for a full life in the manner you prefer? If you transfer it to your family, how will you retrieve your investment in the company? How will you balance transferring the bulk of your assets and investments to specific family members while also being equitable to additional family members?
Setting your short-term and long-term goals, as well as determining your liability protection needs is the key to executing a plan. With those goals in place, you can focus on income, investment, and retirement options, as well as developing individuals to take on key roles within the business. Further, you should create a working plan for ongoing business activities. If you were unable to manage your business, would anyone have the knowledge to pick up and continue the business? A written operating manual including trusted advisors can be very helpful.
We can help you pick a business entity form that offers liability protection and ease of transfer. We can help structure your ongoing business operations to provide clarity for anyone taking over the leadership roles. We can work with your financial and tax providers to assist you in analyzing the next stages of transferring your entity, and help with gifting or sale options. We can also help you coordinate streamlining business entity ownership for simplifying transfers through your estate plan.
Part of this planning includes understanding what happens both during life and after death. During life, you can prepare strong business documents (operating agreements/bylaws) and personal documents (durable powers of attorney, including special limited powers of attorney for business purposes) that make certain your business is managed appropriately, with limits placed with respect to who can own and control the entity. Your Will or Revocable Living Trust can assist with transitioning assets at your death in any manner you prefer.