Four Succession Strategies
21st August 2017 Chris Roe, Waldron Private Wealth
Family business succession planning is a key issue for many family firms. Here, we outline 4 strategies that you may not have considered.
Preparing a family member or trusted employee to take over a business that has taken a lifetime to create can be challenging on many levels. But in order to sell your business with the same level of care that you built it with, you should familiarize yourself with your options.
1.Create a structured succession plan: This would entail creating defined roles for heirs who will continue to be involved with the family business as well as a shareholder structure for those who may receive revenue from the business, but who will not be involved in its operation.
2.Pass your business on to charity: This strategy may make sense for a business owner who doesn’t have a family member to pass their business to or who has substantial philanthropic desires. This may also make sense for an owner who has set aside a considerable amount of assets to transfer to their heirs, but who would also like to establish a structure to support their charitable goals through the ongoing operation of the business.
3.Consult a professional management firm: Consider this strategy if you have heirs who are not intimately involved with running the business. Develop a managing class to continue running the business once it’s passed on – ensuring your heirs may benefit as shareholders, while protecting the business from inheritors who might implement uninformed decisions. Hiring a professional management team to assist with this process can help to maximize the potential value of the business, and dispel family tension brought on by uncertainty.
4.Sell the business: While the family business may be a great source of wealth, in certain circumstances (ex: dissension within the family structure or simply a loss of passion for the business), it may be beneficial to sell the business as a means of asset protection.
A version of this article first ppeared in the Pittsburgh Post-Gazette, here and has been republished with the permission of the author. For more information, contact Chris by email on CRoe@WaldronPW.com