Business Planning & Succession
When a business owner dies, succession issues can emerge.
The surviving owners want to:
A. Retain control of the business without interference from the deceased owner’s heirs.
B. Enact a prompt transfer of the deceased owner’s interest at a fair price, and-
C. Preserve the loyalty and support of employees, customers, and creditors during and after the transition in ownership.
In another possible chain of events, the deceased owner’s heirs want (1) ongoing financial security after the loss of the deceased owner’s salary and benefits; (2) either retention of the business interest or a timely sale at an attractive price; and (3) prompt settlement of the deceased’s estate (including proper tax valuation of the business interest, if they plan to sell it).
The worst case scenario can be prevented.
Conflicts and possibly even litigation might arise
between the deceased owner’s heirs and the
surviving owners. This creates delays in the transition to successor ownership and in settling the deceased owner’s estate might be inevitable.
Worst of all, any loss of customers, employees, or creditor confidence can damage the business…and
possibly even force its liquidation!
The Solution Is Simple
We recommend a formal buy-sell agreement among the business owners is the first step in assuring a successful transition in business ownership following an owner’s death.
The agreement sets a fair price for the business
interest and terms of sale that are reasonable to
all parties, encourages confidence in the validity and legitimacy of the business, and provides a strong foundation for the future.
The price established in a buy-sell agreement
typically sets the value for estate tax purposes,
which helps to avoid estate settlement delays
and IRS challenges…and we are here to help you with the details!
Work With Us For A Smooth Transition
A properly designed and funded buy-sell agreement satisfies the legitimate concerns of all parties involved by assuring business continuation that benefits sellers, buyers, employees, customers, and suppliers. Minimize your risk throughout this process by partnering with our amazing team at Stagecoach.