Business Succession Planning Attorney

No company can survive without an able owner or manager at the helm. In the event of a key person’s sudden death, illness, or retirement, closely-held businesses are often left scrambling to find a suitable replacement. Large corporations and small businesses alike can avoid a tumultuous transition by establishing a succession plan with a knowledgeable attorney.

If an owner or shareholder of a closely-held business does not have a succession plan in place, his or her stake in the company is either passed on to relatives as part of the estate, absorbed by other shareholders or a combination of the two. In family-owned businesses, this often leads to disputes between siblings and other relatives. For example, those more active in the day-to-day operations of the business may feel entitled to larger shares than others who are less involved.

In larger corporations, without a plan in place employees and clients may leave the company for fear of instability. Additionally, remaining shareholders may not have sufficient resources needed to purchase the shares of the exiting or deceased shareholder. This can lead to a situation where a spouse or child of a deceased shareholder has no liquidity and lacks sufficient cash for their living expenses. Furthermore, if the exiting shareholder had a management duty, his or her replacement may not be equipped to take over this role during such a delicate transition time. This can also adversely impact the company's progress and future success.

An attorney with the right expertise can help business owners put together a plan that facilitates a smooth transition. Plans are customarily created after management, shareholders and family members have been consulted and goals for the future of the company have been outlined.

Succession planning can be tailor-made to fit any business model and should address the following issues:

  • Whether the business or shares will remain within the family. With a retention plan, a spouse, children, or other relatives can retain control of assets
  • Whether shareholders or vital employees should be offered a larger stake in the company. Interested parties stipulated in the plan can be granted the right of first refusal or the ability to accept or reject the shares of the exiting or deceased owner before they are offered to others outside of the company, with the price of the shares to be determined by a valuation mechanism agreed upon during succession plan negotiations
  • Coordination with an estate plan, including minimization of potential estate taxes
  • Preserving “institutional memory” when current managers are no longer running the show. For example, you can empower advisors to aid the transition team and ensure continuity, oversee day-to-day operations, provide provisions for heirs who are not directly involved in the business, and provide education and training to family members and key employees who will take over the business
  • Establishing measures to ensure the business has enough cash flow to pay taxes or to buy out a deceased owner’s share of the company

With so many factors to consider, it is important that you consult an experienced business planning attorney who can understand all of the interests at stake and work with you to protect them. With an office located in White Plains, NY, Claudia Pollak is available to help clients in the Lower Hudson Valley, including Westchester, Rockland, Putnam, Orange and Dutchess counties, with their succession planning. Call (914) 908-6220 for a free consultation today.

© 2020 Claudia Pollak Law PLLC
75 South Broadway, 4th Floor, White Plains, NY 10601
| Phone: 914-908-6220

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