BUSINESS SUCCESSION PLANNING

To successfully plan for and execute the passing of one's business, one needs plan thought out with attentive detail and consideration to organizational values. At Underberg & Kessler, we have a team of attorneys experienced in business succession planning ready to assist you in the creation and execution of a business succession plan that will achieve your goals regarding the passing of the business. Whether at the beginning of the process, or somewhere along the way, our business succession attorneys in Rochester, Buffalo, Canandaigua, and Geneseo are ready to help you!

You can contact us here and read about business succession planning below:

What is Business Succession Planning?

Business succession planning is the process of preparing for the transferring of business assets and leadership to a key employee or family member. A business succession plan usually features a contingency clause that can be used to prepare for the replacement of key employees should the need arise before the execution of the asset transfer part of the plan. The transfer of assets can have many implications for the operations of one's business, as well as tax and legal implications. A proper business succession plan is needed to not only ensure the transfer of assets executes seamlessly and enshrine organizational values, but also to have contingencies in place in case of the unplanned departure of key employees.

Why Does One Create a Business Succession Plan?

A proper business succession plan is crucial to ensure the smooth operation of a business, navigating the business leaders through planned and unplanned transition periods. Without a plan in place, a business opens themselves up to substantial risk not only to business operations, but also to the business' core values, leadership, and finances. A past Harvard Business Review study showed that every year roughly 15% of corporations replace their president or CEO, but only 61% of corporations had a viable internal candidate. Having a business succession plan in place helps mitigate the risk of not being prepared for leadership transitions. Proper business succession plans also help to retain key employees. Generally as part of a business succession plan, a business ownership group would groom a few key employees in leadership roles for the potential to lead the business should and when the need arises, planned or unplanned.

What is a the Process of Business Succession?

The process of business succession involves transferring all or a portion of ownership interests or economic interests from one individual or ownership group to another. It can also involve replacing a key leadership employee such as a CEO or president both a leadership change and a transfer of interests. This is a long-term process and if done correctly, should take multiple steps. It may have major tax and financial implications to the business and it's owners and executive employees.

What is a Business Succession Plan for Startups?

A business succession plan is like a prenuptial agreement that covers the business and its owners. While all of the owners are in honeymoon bliss, they can come to a written agreement as to how to address buy-sell situations that might arise in the future due to death, disability, divorce or disengagement (either voluntary or involuntary), along with method to value the interest of the departing owner and payment terms.

CEO Succession: How Do I Find a Successor?

In a perfect world, as part of your business succession plan, your business would internally identify and groom a few key employees for the potential to succeed your CEO well in advance of the succession. Generally, internal candidates lead to fewer business disruptions to the business' operations. Sometimes the timing will not be predictable however. Sometimes there may not be a viable internal candidate. Whichever the reason, sometimes the best decision is to seek an external candidate as a CEO successor. There are many resources available, but if our assistance is needed in the search or in structuring the executive compensation package, we are available to assist your business.

What is it Like to Takeover a Family Owned Business?

When it comes to family owned businesses, there in generally a need for a thoughtful and sensitive approach towards succession. There can be many more considerations and issues to overcome that are beyond normal business-specific issues. In these cases, business is not always business. We'd be happy to help assist your transition as a successor of a family owned business.