An important part of any strategic business planning is succession planning. Many owners approaching retirement age begin to consider whom they want to pass the ownership of their business and how to do that.
The sooner you develop a plan, the better, but no matter when you begin to think about the process of business succession, an experienced attorney can help identify your goals and put in place the plan that will help you achieve that goal.
Never Too Early To Begin Your Business Succession Plan
Ideally, you should engage in succession planning for your business at the same time you are drawing up your member agreement, partnership agreement, or your articles of incorporation and bylaws. This is because should you, or any partner, unexpectedly leave the business, it can have a disastrous effect on those who remain and could threaten the business itself.
There Is More Than Death To Worry About
For your business, any form of incapacity can produce serious repercussions. A car accident, a stroke, or any other incapacitating medical condition could leave your business at a loss for leadership or critical skills, or in a liquidity crisis.
Any unplanned departure or death can throw the business into chaos, as others who lack actual legal authority are forced to make decisions that can become the basis for distention, dispute or litigation.
Create A Plan Before You Need It
At John A. Cochran, Esquire, we understand these problems and can explain how you can avoid them by proper business succession planning. In addition to the difficulties that can result during the life of your business, if you have operated a business all your life and now want to step aside, you want to have an orderly and carefully drafted plan in place.
If you own a family business and have children or other relatives who want to join the business, a comprehensive succession plan can prevent the types of disputes that can tear a family and a business apart.
The plan can set the proper expectations and ensure that all of the interested parties have a clear understanding of the order of succession. This can reduce the likelihood of misunderstandings and disagreements from festering into legal challenges and causing severe disruptions for a business.
Divorce Involving Owners Or Their Children
Another concern for a business is that there are protections from unwanted partners. If you should divorce, your business will likely be a substantial asset of your marital estate. If you have to divide your interest, your former spouse could wind up with a share of the business. The same could be true of an adult child who divorces and has an interest in the business. A family trust is one means of protecting your business from this unfortunate result.
Other Family Issues
If you intend to have your children involved in your business, determining the proper share of interest may be difficult. One child may be integral to the business, while one may have no role. Giving them equal shares could cause problems and disputes. Any succession plan should be updated and adjusted over time as the facts and circumstances of your business and family change.
Contact My Office
All of these issues are better taken care far in advance of their being needed and not during a crisis. To schedule a consultation with a knowledgeable lawyer who can help you with all aspects of developing and implementing a business succession plan, call John A. Cochran, Esquire, at 724-216-5180 or use my online form and make an appointment at my Greensburg office.