Succession Planning for Family Businesses

Plan Your Exit Before Entering the Future

by Karen Stern

Transferring a business to the next generation can be a formidable task. With many factors to consider in the process, it’s no surprise that only roughly one-third of all family businesses in the United States are actually passed down successfully. Despite the odds, business owners can substantially increase the chance for success with early planning. Consider the following important questions and implications before creating a succession plan:

Family questions:
• Does the next generation want to own the business?
• Is the next generation capable of managing and operating the business?
• Does the next generation have the financial means to purchase the business?

Financial implications and other challenges:
• Can the current owner(s) afford to sell and/or transfer the business?
• If there are children not involved in the business, how does this affect the business owner’s estate plan?
• If a “buy/sell” agreement is executed, how is the funding accomplished, and if there is life insurance, who pays the premiums?

To discuss your current plan or for help developing one, reach out to your financial adviser, or for independent advice, contact David Heilich, partner and practice leader of the Brown Smith Wallace Family Wealth Planning Group, at dheilich@bswllc.com or 314-983-1273.

For more information on how a bookkeeper or CPA can help your business, contact Karen Stern, partner in charge, Entrepreneurial Services Group, at 314-983-1204 or kstern@bswllc.com.

Karen Stern, CPA, (kstern@bswllc.com), partner in charge, Brown Smith Wallace Entrepreneurial Services Group, provides tax and accounting services for companies ranging from start-ups to $20 million in revenue.