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Business Succession Planning 101 Your business started with a plan. It grew and became successful with a plan. Shouldn’t your exit be as well planned, too?
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HEN I FIRST ASK SUCCESSFUL business owners their plan for leaving their business, they often look at me quizzically and say, “Why should I plan on leaving my business, it’s going along great right now!”
M michael palermo
is an Asheville business lawyer with over 25 years’ experience.
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Then I ask them if they know the odds of their leaving the business one day. After a second they realize that there is a 100 percent certainty that at some point they will no longer own their business. “Well, I guess I’ll leave it to my kids,” they often come back with. “Great,” I respond, according to script. “Do your kids want to own the business, is there enough profit in your business to split with all your children, can all of your children get along well enough to run the business?” The conversation goes like this every time, seeing on their faces the realization of what the effects of their lack of succession planning might look like. At this point we can have a conversation about real succession planning: That is, how
| February 2020
can a business owner transfer ownership of their business while monetizing the transaction, providing economic surety and predictability for their family, loyal employees and customers, and ensuring that their legacy of success continues. True succession planning should start as early as the founding of the business. Your business has value, whether you own it or someone else does. That value can disappear, however, if the transition from your ownership to the next is mishandled. In this article I’ll detail the reasons why you should have a formal succession plan. In a subsequent article I’ll set out the various ways to finance the sale of the business under your plan.