In the simplest terms, a business succession plan allows a business owner to pass on leadership roles or to hand over their business in the event of an owner’s exit due to a variety of reasons including retirement, disability, or death — allowing the business owner(s) to control what happens to the business. Whether an owner chooses to leave his business to his family, key employees, or seek an outside third party to purchase, a clear-cut plan outlines the owner’s intentions and follows set wishes.
A business succession plan for any type of business should have, at a minimum, a well drafted agreement including provisions regarding an owner’s exit and how it will be managed. If an operating agreement already exists without these provisions, it’s possible to execute a buy/sell agreement to indicate the wishes of the owners/members/shareholders. Ideally, the planning process should initiate at least five years before a planned retirement. In the instance of a non-planned exit of an owner due to death or physical or mentally disability, a business succession plan guides logistical and financial decisions regarding leadership and operations going forward. Factors involving business succession planning and strategy that go beyond transferring ownership include evaluating day-to-day operations, review of facilities and/or locations, analyzing the potential impact of business interruption, and a plan to protect data and infrastructure.
What Happens Without a Plan?
In Texas, if you do not have an agreement that outlines your exit plans, then a last will and testament will control the disposition of your business interests. If you die without either a will or a business succession plan, then your business interests pass per Texas statute. This could leave the future of your business in jeopardy, and may cause ongoing issues with surviving business owners and heirs.
Safeguarding Your Business Assets
Transitioning your business should be handled by an experienced third party who understands the nuances of this often complicated process and who can efficiently incorporate your exit strategy so that your business continues as you intend. Planning properly avoids common and some not so common scenarios that can make business succession difficult and cause unnecessary and costly delays and complications down the road.
Contact Angela Odensky at The Law Office of Angela Odensky at info@odenskylaw.com to discuss your business succession strategy now.
A well-crafted business succession plan keeps your operations running seamlessly when you step away, safeguarding your assets and reducing disruptions. It’s essential for preserving your legacy and securing the long-term success of your company.
A business succession plan ensures your business continues smoothly after your departure, protecting assets and minimizing disruptions. It's crucial for securing your legacy and the future of your enterprise.