What Is Business Succession Planning?

Business succession planning is an opportunity for owners of closely held business to build, maximize, and monetize the value in their business. This planning is a requirement for any business that is to succeed and prosper. A business succession plan is a work in progress which takes into account;
  1. where the business is now
  2. plans and benchmarks for growth
  3. exit strategies and alternatives for the owners retiring, selling, transferring and transitioning out of the business.
A well conceived business succession plan will establish a market for, a price for, and the funding for a tax-effective transfer of the business entity from one owner(s) to the next, while maximizing fair market value.
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Why Do a Business Succession Plan?

There is a saying that “If you don’t know where you are going, any road will get you there”. Most (if not all) business owners put too much time, energy, financial and emotional resources into their business to risk selling it at fire-sale prices. Yet without a well-conceived succession plan, too often this is precisely what happens. A business succession plan will facilitate an “exit strategy” that fits the goals of the owners, is tax effective, and will attract the highest value.

Business Succession vs. Estate Planning: How Do They Differ?

A business is typically one of the largest and most valuable assets of the owner, and there must be good coordination between the orderly purchase, growth, and transfer of the business and an overall estate plan. Estate planning takes all and every asset into consideration, whether a business asset, personal, real or intangible. The goal of estate planning is to consider the impact one’s business on the total estate and financial picture, and then plan strategies to maximize return while minimizing estate and transfer taxes.

One should take advantage of proven, best-in-class strategies to maximize return and minimize taxes, while keeping the goals of the owner and family in mind. In today’s low interest rate environment, many estate planning and business succession ideas are particularly effective.

How is a Business Succession Plan Conducted?

We follow the planning approach that mirrors one recommended by the Certified Financial Planner Board of Standards:
  1. Establishing and define the client relationship.
  2. Gathering client data, including goals.
  3. Analyzing and evaluating your business and financials, key person and related agreements.
  4. Developing and presenting recommendations and/or alternatives.
  5. Implementing the business succession recommendations.
  6. Monitoring and measure results

Role of the Client

The key to successful planning is establishing a relationship of mutual trust among the planner, the client and the client's professional advisors. It is in the client's best interest to be open and forthcoming with the valuator in order to avoid errors and reduce costs.

For more information or to arrange for a consultation
please call 914-944-0066.