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Home : Planning Your Finances : For Your Business : Continuing the Family Business
Continuing the Family Business
Do you have a business continuation plan? Typically, successful family and closely held businesses follow a business plan aimed at maximizing profits. But, to maximize the value of their businesses for their own benefit and their heirs, business owners will need more. A business continuation plan may complete the equation.
Why Do You Need Business Continuation Planning?
Assuring the Preservation of Your Business
Why Do You Need Business Continuation Planning?
Three common characteristics of closely held businesses make business continuation planning essential.
First, many closely held businesses lack successor management. If a chosen successor isn't there to open the doors, stock the shelves and direct operations, the business may fail.
Finding a buyer and getting a fair price for the business may be difficult, especially following the owner's disability or death. Unlike publicly traded companies, a marketplace for buyers and sellers of closely held businesses doesn't usually exist.
Finally, if you do not hold a majority of controlling interest, you or your heirs should expect a reduction in your anticipated sales price. Buyers are often unwilling to pay fair market value for a minority interest that lacks management control.
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Assuring the Preservation of Your Business
So what's the bottom line? Unless you plan for the eventual disposition of your business interests, the value may be diluted, not maximized.
Business planning is a complex undertaking, generally requiring the efforts of more than one professional. The first step is putting together your team. Here are the key members you should include.
Estate and Business Planning Attorney
Choose an attorney who specializes in estate planning and business continuation. Your choice could mean the difference between successfully achieving your goals and the failure of your business plan.
Life Underwriter
An insurance professional can assist you in determining the best type of policy and coverage you'll need to meet your goals.
Certified Public Accountant
A CPA can assist you in complex business valuations.
Business Appraisal Expert
In the event of a disagreement with the IRS as to the value of the business interest, a trained expert in this field can provide expert assistance.
Financial Planner
The financial planner may be your life agent or accountant or another member of the team with broad knowledge and special training in financial planning. He/she can coordinate the efforts of the team.
For more information and help with your business planning needs, contact a
Transamerica representative.Top of Page
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