Consider These Steps When Creating a Business Succession Plan

by Kevin Ward CFP® – Advisor

I recently wrote a blog post about Buy-Sell Agreements and why they are an important planning tool for business owners. Another contingency plan scenario that requires additional planning is if you’re the sole owner and intend for the company to pass to future generations. Many business owners hope that the family business will thrive for 3+ generations, but the reality is that most family businesses do not make it to the second generation. One way to help increase the likelihood of success is creating and properly communicating a business succession plan. A great starting point is to have a conversation with your family to gauge their interest in continuing to own and operate a legacy business should something happen to you that addresses the following questions: 

  • Would your family want to continue to own and operate the business? 
  • If so, who would run the business? Would the remaining spouse and/or next generation have the ability and skills set to run the business? Would they hire a professional management team to be the caretaker of the business for the family and employees’ benefit? 
  • Are there any key employees that should be rewarded for their dedication and efforts to the company? Is there room and share respect that would allow for family members and key employees to act simultaneously in management roles? 
  • If family members don’t have the ability or interest to own and operate the business, what is the process for preparing the company for sale? Who would be an ideal buyer? A competitor? A private equity company? Employees or management team? 
  • If the remaining family members were to sell, what professional service providers would support them in that process (e.g., CPA, bankers, attorneys, investment banker or business broker, Certified Exit Planning Advisor, etc.)? 

Owners can often find creative solutions to keep their business in the family. One of our clients had several daughters and none wanted to take over the company – but the husband of one of the daughters did. Over several years, he advanced and eventually became the chief executive officer. Working with the owner and his attorney, we set up a special trust to make all daughters and the son-in-law beneficiaries while still protecting all the daughters’ financial interests in case the CEO and the owner’s daughter ever decided to divorce. 

Having these conversations early and often can help lead to a successful transition of the business in a worst-case scenario and make eventual retirement conversations much easier. Waiting until it is too late to plan for the next generation to take over the company may result in financial troubles for the business or worse disgruntled family members and division among them.  

These are conversations that we are constantly having with our business owner clients. If you want to start a conversation and how the Borglum Team at Moneta can help you, please don’t hesitate to reach out to me at 


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