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Office LocationKamerow Law Firm, PLLC
5001 Seminary Road, Suite 110
Alexandria, VA 22311
So you’ve spent the better part of your adult life pouring your heart, soul, blood, sweat, and tears into building a successful business and now you are looking forward to enjoying the fruits of your labor in retirement. But what are you going to do about the company you raised as a baby into adulthood? Ideally, you want one of your children or a trusted insider to take over to ensure that the hard work you put into your child is continued long after you are gone. You need to create a business succession plan.
Business Succession Plans
A business succession plan should make the transfer of ownership smooth in an ongoing planned and structured process that needs teamwork and frequent re-evaluation. As much as you and your successor may want to skip the planning difficulties, if you want to be one of the 30% of family businesses that continue into the second generation you need to make sure you are aware of the many facets involved in transferring ownership.
Your succession plan should have at least the following two elements that should be managed separately.
- Transfer of Power. You must decide to whom you want to leave your business. You will usually choose this person(s) because you feel that he or she is most likely to be successful in keeping your business operations running well.
- Transfer of assets. The transfer of property is not always synonymous with the transfer of power. Sometimes, the wealth that has accumulated as a part of the business is left to your family members. The beneficiaries of the asset transfer may or may not be the same parties that receive the transfer of power.
Transfer of Power
There are a lot of factors to take into consideration when transferring power to your successor including
- What type of business you have
- The involvement and skill level of your successor
- The laws, economic factors, competitors, technology, etc. Related to your business
- The dynamics of the family (if it is a family owned business) including their health, marriage status, any conflicts among family members, etc.
Issues to deal with when selecting a successor
Often, in a family owned business, there will be one person who is more involved, skilled, and invested in the business than anyone else. This is often the default successor. It isn’t uncommon for the owner of the enterprise to have already begun the process of getting this successor prepared to take over the business. They will often already have much of the knowledge necessary to step in, but there may be other issues at hand that make it less than ideal. There may be a generational conflict, differences in goals and visions for the future of the business, or even a successor who is very qualified without the desire to take over. The different scenarios are virtually endless, and all of these factors must be considered when selecting the best person for the job.
Alexandria Estate Planning Attorneys
The attorneys at Kamerow Law can help you to determine the best course of action when it comes to your succession plans. From asset management to ownership/power transfer to an heir we can evaluate your particular situation and advise you on how to ensure your life’s work will be preserved for the next generation. Contact us to schedule your free initial consultation. Call 703-370-8088 or contact us online.