Legacy Planning
(Succession & Estate Planning)
Ensuring your legacy continues as you envision it for your family and business.
Don't wait until it's too late.
Plan now and rest easy.
You work hard building your business and creating wealth to provide for you family needs and to build a nest egg for retirement. Often, owners put their heart and soul into their business and make sacrifices to ensure its success and long-term viability.
When the time comes to transition from the business, there are a multitude of options and strategies to consider. It can be overwhelming and sometimes difficult due to family dynamics or because of underlying health problems, etc.
When it comes to Legacy Planning (this may include business succession planning and estate planning or both) it's ALWAYS better to start much earlier than you think. Planning 3-5 years in advance is ideal.
Why so early? Essentially, if you want to maximize all the value you can from your business, it sometimes can take some extended timeframes to implement changes in your business and get the improved results needed. You may need to also consider extended timelines to implement tax-savings strategies to keep as much as your legacy wealth as possible.
If you wait, you may find your life circumstances change and suddenly, you're rushed into selling or transitioning, leaving you no time to implement changes that could have increased your business value.
Legacy Planning ensures your wishes for your family and business are implemented.
Have you put much thought into what will happen to your business when you are ready to leave it? It's important.
Generally, there are three or four main scenarios that you might consider.
-
Someone from your family takes over the business.
-
Employees might consider purchasing the business.
-
You sell the business to a new outside owner.
-
The business is acquired by another business in a merger or acquisition.
Your choices become even more complex if your business is a partnership or publicly traded company.
In scenario number 1 and 2, you need to consider (well in advance) who is best suited (and trained) to take over the business.
-
Are one or more of your children interested in taking over the business? Are they qualified and genuinely interested? IF more than one, how do you determine which will get it or what positions would they be best suited for?
-
If not your children, are other family members a potential fit? How quickly could they be trained to take over?
-
If family members are not interested, have you identified your most qualified internal leadership candidates? If so, have you assessed and identified any competency gaps where they will be needing mentoring, coaching or additional training or certifications?
Obviously, solving these types of scenarios would take time to implement (training, etc.) so the earlier the better.
In scenarios 3 and 4, where you are looking to sell the business to outside buyers.
-
It is important to do everything you can to boost efficiencies, profitability, and implement systems to remove yourself from the day-to-day operations of the company.
-
You'll get higher multiples on your business value when a new owner can take over the business and not have to rely on back & forth communications with the previous owner to sort out issues.
-
Ensure your business has competent, dedicated employees who are empowered to make decisions on their own. Having a stable workforce is attractive to potential buyers.
-
Ensure the business financials are optimized to demonstrate at least 2 years of normalized business income.
You may need to also consider extended timelines to implement tax-savings strategies to keep as much as your legacy wealth as possible. This may require up to 2 years to set up proper strategies for savings
If you wait, you may find your life circumstances change and suddenly, you're rushed into selling or transitioning, leaving you no time to implement changes that could have increased your business value.