It is never too early to start thinking about succession planning. All business owners eventually reach a point where they want to retire, they want to slow down, they want to try their hand at something new, they want to give the younger generation a chance to show their stuff or they just want to cash out. In every case, it is a smoother and generally more profitable transition if the owners have taken the time to plan and think through what is required to successfully transition their business.
Succession planning may involve employee stock ownership plans (“ESOPs”). By using a ESOP vehicle, business owners may be able to create a market for their stock where no market otherwise exists, and may be able to sell their stock to such ESOP in a tax-advantaged away. But ESOPs are somewhat complicated and costly to set-up and maintain, and you need to consider whether the possible upfront tax savings are worth the cost and administrative complexities inherent in such arrangements.
There are many other issues related to succession planning that need to be considered including valuation of the company stock, use of valuation discounts, use of stock redemption or buy-sell agreements, use of employee non-compete agreements, training of future management, etc. More about succession planning issues will follow in future blogs. Please give me a call if you want to discuss succession planning and how we can help you. Jsenney@pselaw.com or 937-223-1130.
AND ONE MORE THING. The American Red Cross is an important part of our national disaster recovery system. In light of the recent natural disasters and the terrorist attacks our country has endured, the importance of supporting Red Cross and its missions cannot be overstated. Our local chapter of American Red Cross is organizing a gala, Putting on the Glitz, as a fundraiser to benefit disaster relief and preparedness in the Miami Valley. The event will take place Saturday, April 27, 2013 with the theme, “Providing Hope Like a Bridge Over Troubled Water.” You can donate/vote by clicking on the donate link. Thanks for your support for this great cause.