Business Succession Planning Strategies

A buy-sell agreement ensures they’re given fair compensation, and allows the remaining co-owner(s) to maintain control of the business.A buy-sell agreement with a co-owner requires a lot cash kept on-hand.

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This usually involves a buy-sell agreement, secured with a life insurance policy or loan.

There are 5 common ways to transfer ownership of your business: This guide covers each of these succession plan types in greater detail.

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This is a popular option for business owners who have children or family members working in their organization.

If a purchase is involved, the sale price and purchase terms are also clearly outlined, relieving some of the stress for the departing owner’s family.

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In other words, a well-crafted succession plan aims to benefit everybody— the departing owner, their family, the business and the successor.First things first, there is the question of will take over.If you have just one family member who works alongside you, this is an easy decision.This type of agreement can help ease the burden of an unexpected transition— for the business and family members alike.A spouse might be interested in keeping their shares, but may not have the time investment or experience to help it blossom.Business succession planning is a series of logistical and financial decisions about who will take over your business upon retirement, death or disability.To write a succession plan, the first step is to identify the ideal successor to take over the business, then determine the best selling arrangement.It can get complicated when you have multiple children, nieces or nephews, and more than one are interested in taking over the business.In this case, you need to provide clear instructions on other heirs will be compensated.If you choose to draft a buy-sell agreement with your co-owner, you’ll want to make sure a life insurance policy is stipulated in the agreement.We recommend speaking with an expert for specific help on the type of policy you’ll need.