Family businesses often have unique challenges around the issue of succession planning. According to recent studies, closely-held businesses represent 47% of the nation’s gross domestic product. Unfortunately, these same surveys indicate that 70% of those businesses will not survive the transition from the first generation to the second. Of those that do survive the transfer through the first generation, only 17% survive a transfer to the third generation, and less than 10% will survive a transfer to the fourth generation. A defining characteristic of those businesses that survive is the quality of their succession plan.
For family-owned business, a succession plan is as important as an estate plan is to an individual. Transitions in ownership and management are inevitable – having a sound succession plan in place protects the business, its owners and their families. Our practice in this area is firmly rooted in decades of providing legal counsel to multi-generational businesses.
We assist you in creating a comprehensive succession plan individually tailored to the unique characteristics and needs of your business and family. Depending on your particular business and goals, plans may provide for inter-generational transfers of ownership over time by gifting, or repurchase; or a planned transition to one or more key employees through a structured buy-out and related documentation regarding voting, timing of payments, and security for payment; or an ultimate sale to a third party, whether a competitor or strategic buyer of your business.
We prepare the documentation necessary to effectuate the succession plan you choose, which may, in addition to shareholder’ agreements, buy-sell agreements, and related documents, also include traditional estate planning documents. We work with your accounting representative, financial advisors, and life insurance professionals to make sure that your succession plan is seamless, and all arrangements dovetail.