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Succession planning

Planning for transferring ownership the right way.

Prepare now to succeed later

Building day-to-day business operations take energy and time to succeed, but don’t get so caught up in the now that you ignore the future. There are a number of factors affecting when and how an organization should put a succession plan into place.

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If the logical choice is to sell the business and exit entirely, then a succession plan is one option.

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For owners that prefer to maintain their business for continuation even after they retire, a succession plan must be drafted.

People’s United Advisors

People’s United Advisors offers wealth and investment solutions, customized to each client. We draw upon our tenured team's expertise and the extensive resources of People’s United Bank to help clients navigate through their unique wealth challenges. With a long fiduciary history, we pride ourselves on acting in the best interest of our clients and providing each client with the uncommon expertise of People’s United Advisors.

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Choosing a successor

The first step is to identify an appropriate successor to take over the business. This is not as easy as it might sound. Is this person a family member or assistant? Or will it be a partner or several parties? Often there is not a clear answer and each choice will need to be carefully considered for its own strengths and weaknesses.

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Valuing the business

In order to execute the sale or transfer of a business, a set dollar value for the business needs to be determined. This can be done in several ways, including having the business appraised by an independent party such as a CPA, or by an arbitrary agreement between all partners involved. If the company consists of publically traded stock, the valuation of the owner’s interest is determined by the current market value of the stock.

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Make a plan

There are several common types of business succession plans that organizations frequently put into place, such as:

  • Selling the business to a co-worker
  • Passing on business to an heir
  • Selling to a key employee
  • Selling to an outside party
  • Selling shares back to your company
  • All require careful execution to make it clear what the plan is, reduce any potential disputes between parties, ensure that the terms and conditions of a potential sale are clearly outlined, and relieve some of the stress for the departing owner's family.
  • Further, there are additional options available to minimize the financial burden on family, such as employee stock ownership plans or certain life insurance policies. These should all be addressed when considering the magnitude of options available to a departing owner.

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