After spending a lifetime building your business, you want it to continue to succeed long after you’re gone. That means you need to have the right plan in place to keep your business alive and solid after you pass on. Having a Tennessee business succession plan gives you that control, letting you decide if the company should pass on to family members or take another route in line with your desires.
The estate planning lawyers at Martin Heller Potempa & Sheppard, PLLC help business owners in the Nashville area and throughout Tennessee execute their wishes through the help of business succession planning. We offer experienced services to make sure their companies are properly handled in the event of incapacitation, divorce and other property division issues, death, or retirement. Our firm works with our clients to ensure the proper documents and strategies are used to carry out the transition of their businesses in line with their goals and needs.
Options For Your Business Upon Departure
Business succession planning may include ensuring the entirety of your company is left to a person of your choosing, dividing responsibilities and value in proportion to children who participate in the business and those who do not, or other options that transfer ownership outside the family. Some of these options include:
Management buyouts, such as buy-sell agreements or another stock transfer process involving price determination, terms of sale, and other complex business strategies
Sale of the business to key employees, either by partial sale using a non-qualified deferred compensation arrangement or complete sale of all stock options
Outside sale, which may include selling to a new owner or the business’ closure
Liquidation of a business’ assets may also be an option to ensure your company gets the highest price to be used to pay off debts. Whichever outcome is in a business owner’s best interest requires detailed preparation of agreements and other documents, such as those related to various trusts or wills necessary for proper execution.
When you are planning what the next phase is for your small business, having a succession plan in place can be even more critical as these companies may not be able to thrive without the right players in place. Having a clear Tennessee business succession plan will help clarify internal issues, like:
Establishing the rights and obligations of all parties
Providing adequate compensation for an existing owner’s interest
Identifying potential events that may prompt succession plan revisions
Outlining backup methods for “what if” situations
To develop your small business succession plan, you’ll want to consider the following:
Select your successor. In many cases, if the company is not large, you may want to consider a third-party individual so family members do not feel as if you have pitted them against one another.
Train your successor. The company can only be as successful as the people who operate it. Be sure to train the up-and-coming successor on your business practices and protocols.
Create your timeline. When you are planning for retirement, you’ll want to give ample time to the training and selection of your successor. Of course, in matters of an unexpected death or diminished capacity, these things cannot be helped.
Hand the company over. When your timeline has been met and you are prepared to step down, allow your successor to take the reins.
Business Succession Planning for Family Transfers
Future planning for your family business often means making sure your spouse or children have certain rights and responsibilities in the company upon your death, incapacitation, or departure. A comprehensive business succession plan may include contracts of employment for those family members who are to manage day-to-day business, as well as a sales agreement between an owner and his or her children or spouse. These plans may also incorporate life insurance plans that serve to buy out current interests and provide payment for stock prices within an estate, or the creation of a family limited partnership with an option for limited partners to increase equity in the future.
Regardless of the arrangements preferable to a business owner, these agreements and documents should be revisited every few years to make sure they are still in line with the best interests of you and your family. Consulting an experienced attorney who can help you assess your business’ future prospects, as well as your goals and family’s needs, is essential to successful future business planning.
Discuss Your Business Succession Needs with a Nashville Attorney
Taking the steps to plan for when you exit your company can help you now, as well as in the future when you decide to retire, or if you become unexpectedly incapacitated. The business succession planning lawyers at Martin Heller Potempa & Sheppard, PLLC can guide Nashville residents and others across Tennessee through this process. If you need assistance with your business succession plan or any estate planning service, contact us today for more information.