A company cannot survive without an able owner or manager at the helm. In the event of a key person’s sudden death, illness, or retirement, businesses often scramble to find a suitable replacement. Avoid a tumultuous transition by consulting with Christie Tournet & Associates to establish a business and succession plan.
Without a Plan
If an owner or shareholder does not have a succession plan in place, his or her stake in the company is either passed on to relatives as part of the estate, absorbed by other shareholders, or a combination of the two. In family-owned businesses, this can lead to disputes between siblings and other relatives. And, those persons more active in the day-to-day operations of the business may feel entitled to larger shares than others.
In larger corporations, employees and clients may leave the company for fear of instability. Additionally, without prior planning, remaining shareholders may not have sufficient resources needed to purchase the shares of the exiting or deceased shareholder.
With a Plan
We can help owners and shareholders establish a plan that facilitates a smooth transition. Business success plans are customarily created after employees, coworkers, shareholders, and family members have met and goals for the future of the company have been outlined. Succession planning can be tailor-made to fit any business model and should address the following issues:
- Keeping the business or shares within the family so that a spouse, children, or other relatives can retain control of assets.
- Offering shareholders or vital employees a larger stake in the company. Sometimes, the plan will include offers of right of first refusal to shareholders and the price of the shares can be determined by an agreed-upon-valuation method.
- Establishing measures to ensure the business has enough cash flow to pay taxes or buy out a deceased owner’s share of the company.
- Implementing a family employment plan with policies and procedures regarding when and how family members will be hired, who will supervise them, and how compensation will be determined.
With so many factors to consider, Christie Tournet & Associates can counsel you and assist in protecting your investment and interests.