After spending a lifetime building your business, you want it to continue to succeed long after you’re gone. That means you need to do some business succession planning to keep your business alive after you pass away. Having a Tennessee business succession plan gives you that control. It lets 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 MHPS help business owners in the Nashville area and throughout Tennessee execute their wishes through the help of business succession planning. We offer services to business owners to make sure their companies can operate in the event of:
- Divorce and other property division issues
Our firm works with our clients to ensure your business uses the proper documents and strategies 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 in the business and those who are not.
- Transferring ownership outside the family.
Some of these options include:
- Management buyouts: This includes buy-sell agreements or another stock transfer process. These include price determination, terms of sale, and other complex business strategies.
- Sale of the business to key employees: This can be through partial sale using a non-qualified deferred compensation arrangement, or complete sale of all stock options.
- Outside sale: This may include selling to a new owner or the business’ closure.
Liquidation of a business’ assets is an option that ensures your company gets the highest price to use to pay off debts. Whichever outcome is in a business owner’s best interest requires detailed preparation of agreements and other documents. These include any related to various trusts or wills necessary for proper execution.
Why Does a Company Need a Business Succession Plan?
When you are planning the next phase for your small business, having a succession plan in place can be critical. 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. This way, your family members will 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 two things:
- Contracts of employment for those family members who will manage day-to-day business.
- A sales agreement between an owner and their children or spouse.
These plans may also incorporate life insurance plans. These 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, you should review these agreements and documents every few years to make sure they are in the best interests of you and your family. Consulting with 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 Needs with a Nashville Business Succession Planning Lawyer
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 MHPS 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.