Business succession planning is what happens to your business when an owner or partner leaves unexpectedly through death or disability. Who takes over? What happens to the departing owner’s shares and responsibilities? Who takes his/her profits? Succession planning is complex and needs to be done long before an owner departs.
But business succession planning is not just for key majority owners. Minority owners benefit from a well thought out succession plan as well. The plan may include selling the departing owner’s shares to the minority owners. It may include provisions allowing the company to buy back the departing owner’s shares from his heirs, or from a retiring owner, thereby increasing the value of the ownership of the remaining owners.
Finally, a succession plan should include provisions for interim decision making – who makes decisions in the event a key owner unexpectedly leaves? Interim provsions can include assigning legal authority to a remaining owner or manager to sign contracts they might not otherwise be authorized to sign so that the business can continue “business as usual”. Someone has to be authorized to issue payroll – you can see that if an owner unexpectedly leaves, even the most basic decisions need to be provided for in order to keep the business running, and maintain value for a subsequent purchaser.
If you’re interested in setting up a succession plan for your business, including an interim succession plan, call me anytime so that we can get the procedures in place to keep your business up and running in the unfortunate event of an unexpected departure of a key owner. For this and all your businesses legal needs, call me in Asheville, Hendersonville, Fletcher, Waynesville, and all of Western North Carolina at (312) 671-6453, email at firstname.lastname@example.org, or for more information palermolaw.com.
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