While most people are aware of the importance of estate planning in protecting themselves and their families, many small business owners don’t realize that business planning must be an integral part of the process. For most, their business is a major asset, often their largest, and in the event that they become incapacitated or die, there must be a business succession plan in place to protect those they love. At Deland Law Office, in Holliston, Massachusetts, our sharp attorneys assist clients throughout the Metrowest area in planning for business succession.
Though some business owners plan to close up shop when they retire, many feel that the business they have worked so hard to build is part of the legacy they want to leave to their family and their community. Doing this takes careful planning which is where our talented attorneys come in.
Jennifer A. Deland, Counselor-at-Law, will help you clear the path for your business when you retire, should you become incapacitated during your lifetime, or when you pass away. If your business, like the vast majority of small businesses in the U.S., is family-owned, contact us soon to begin planning for business succession. We will customize your business plan to your specifications, whether you want to sell it to liquidate assets for your beneficiaries or transfer ownership to a relative or close friend.
Whatever your wishes are, we will take the time to understand your goals so that we design the business plan that meets your specific needs and protects your family going forward.
Services Deland Law Office Provides to Business Owners
As accomplished estate planning attorneys, we will:
- Listen carefully as you describe the nature and specifics of your business
so that we can help guide you in the right direction
- Prepare an executive summary including a concise business description
of your business’s structure and performance
- Negotiate, draft, and execute all necessary legal documents so that when
the time comes, the transfer of ownership will be as smooth as possible
- Recommend marketing strategies
- Work with a network of finance professionals to make certain we assess your business’s value accurately and fairly.
What Does Making a Business Plan Involve for You?
Because no two businesses are identical, much depends on the type of business you own,
and whether any relatives are now working with you. The following steps have to be taken as we map out a plan that is suitable, sustainable, and profitable over the long haul:
1. Choose a Successor
Consider all your options look for an individual (s) is:
- Familiar with your business
- Has prior managerial experience
- Is energetic and committed to the job
- Has leadership skills
- Understands how to delegate
- Is informed about all compliance laws related to employment (e.g. anti-discrimination, environmental concerns, safety)
You may have an adult child you want to take over the business. But if that young person is not yet knowledgeable enough to handle matters on their own, it may be practical to plan for collaboration between your family member and a trusted employee. Because so much depends on choosing the right person as successor; our business planning attorneys will be happy to offer you guidance as you decide.
2. Set Guidelines
Make sure your successor understands the various components of your business,
even those that will be delegated to employees with particular talents. Also, you should
make clear what the existing duties of each employee are, how bonuses and promotions are given, what disciplinary actions should be taken if required, and what compliance laws require.
Most importantly, if you have not yet established a dispute resolution procedure, do so now. Even if your business has been very stable for years, you want to make sure that the change of ownership doesn’t disrupt your business’s equilibrium or lead to expensive
3. Know the Value of Your Small Business
There are three basic ways to approach business valuation:
1. Asset Approach
The asset approach identifies a company’s net assets by subtracting liabilities from gross assets. Though very direct, this method does not consider goodwill and is not analytical nor especially insightful about the business’s future.
2. Income Approach
The income approach analyzes past earnings and projected future earnings in terms of capitalization and future cash flow. This assessment is more complex than the asset approach but is beneficial in some cases.
3. Market Approach
Market approach analysis gathers information about the recent sale of other businesses in the same industry regarding factors like size, duration, and market risk. Also, it formulates ways to market new products and services for future profit.
Whichever approach is used, the objective is to come up with an accurate and fair business valuation.
Transferring the Business
Our business succession planning attorneys are committed to ensuring that when the time comes to transfer your business, the process will be prearranged and seamless. We will draw up the necessary buy-sell agreements, especially cross-purchase and entity purchase agreements.
Cross-purchase agreements are generally used by businesses with few owners, often partnerships. Each partner buys and owns an insurance policy on the other partners so that if one of the partners dies, the surviving owners are beneficiaries. The new owners then use the proceeds to purchase the deceased partner’s share of the business.
Entity purchase agreements, on the other hand, involve the business purchasing individual insurance policies on each partner. In each of these policies, the business is the designated beneficiary. If one of the partners dies, the business uses the proceeds from the policy to redeem the deceased partner’s share, thus increasing the value of the remaining owners’ shares.
Contact Our Experienced Business Planning Attorneys Today
At Deland Law Office, we are eager to help you plan for your business’s longevity as a successful company. Our goals, like yours, are to promote your business’s mission and objectives, protect your assets, and provide future security and comfort for those you love. Contact our office today!
Jennifer A. Deland, Counselor-at-Law advises business planning clients throughout the MetroWest area, including Holliston, Hopkinton, Milford, Medway, Medfield, Ashland, Framingham, Natick, Sherborn, Dover, Southborough, Sudbury, and Westborough.