Succession Planning & Business Exit Strategies

The Importance of Succession Planning for Business Owners

Whether your goal is to keep your business in the family, sell your interest to a key employee or co-owner, or prepare it to be acquired by another company, you can benefit from beginning the succession planning and exit strategy process many years in advance. Your Financial Advisor can work with you and your tax and legal advisors during the succession planning process.

Selling a business
Transferring the business to a family member
The importance of a buy-sell agreement

Selling a Business

Whether you're planning to sell your business -- or part of your business -- to a co-owner, one or more of your children, employees, or someone else, it's important to consider questions such as:

  • Will you continue, reduce or end your involvement in the business?
  • Once you have sold your business, how will you provide current or future income for yourself and your family?

As you work with your attorney and CPA to sell your business, your Financial Advisor can help you address your changing investment needs as you transition out of business ownership.

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Transferring the Business to a Family Member

There are a variety of succession planning strategies you can use to transfer the business to a family member, including one or more of the following:

  • Selling the business to the family member
  • Establishing lifetime gifts
  • Transferring the business through your estate plan

Your attorney and CPA can help you work through the transfer of your business, and your Financial Advisor can help you develop investment strategies to help address the changes in your income.

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The Importance of a Buy-Sell Agreement

If your business has more than one owner, you need to understand the risks you may face if one of you dies unexpectedly. Some questions you should consider include:

  • Who would become your new partner if your co-owner died?
  • If you died, would your spouse or family be able to sell your shares at a fair price?

A written buy-sell agreement can help protect you and your business from the effects of unintended or unwelcome transfers of ownership. It also protects your heirs by giving them an opportunity to turn your shares into cash. In addition, it's important to develop a plan to fund the transfer of ownership of the business, such as buying a life insurance policy for that specific purpose.

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