Capstone Services
Business Succession and Exit Strategies

All business owners face the inevitability of their eventual departure from the company. Among the concerns confronting them are:

• Maximizing the value of the business for providing them financial security in retirement.
• Providing financial security for their family in the event of untimely death or disability.
• Ensuring the business’s continued success in order to fund their buy-out over time.
• Dealing equally with children working in the business and those who are not.
• Avoiding costly disruptions and disputes surrounding their departure.
• Minimizing the income and estate taxes upon transfer of the business.
• Fulfilling a sense of responsibility for the future well-being of company employees.
  

While many owners would like their family members to eventually own and manage the business, succession planning is much broader than transferring ownership from one generation to the next. In many cases, it involves transferring ownership outside the family. The best succession and exit formulas integrate all of the following considerations:

• Mapping out the owner’s retirement needs.
• Determining how such needs are to be funded.
• Minimizing the deterioration from taxes.
• Providing for family members involved in the business as well as those who are not.
• Using protective buy-sell agreements to script exactly how ownership changes will play out.
• Planning for the development of capable management successors.
• Retaining key employees including those targeted to become future owners.

A sound succession plan necessarily requires a long-term process of positioning a company for a successful ownership transition. Thus, the combination of inaction and the passage of time serves to work against the likelihood of an optimal departure by an owner. The age of an owner may also adversely affect the strategies available. Generally, the older the owner, the fewer their options.

Unfortunately, many closely-held businesses do not survive the death or incapacity of a primary owner. Owners spend a lifetime building their business, but in many cases a lack of time or focus causes them to neglect preparing the business to yield maximum value when they choose to retire.

That’s where we can help. Let us show you how our approach to succession and exit planning can help you prepare for the future without requiring a lot of your time in the present.

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