SUCCESSION PLANNING
Succession planning is extremely important for any closely held business, small or large. The professionals at WEST & COMPANY CPAs PC have many years of experience in succession planning and are prepared to guide our clients through this critical process. We have worked with many of our clients through two or more generations of ownership. As your business advisor, we understand your business and will work with you in assessing a long-term strategic plan for the business, a necessary starting point for succession planning. Having worked with many family owned businesses during the years, we understand that not only is every business unique, but the relationships of every family have unique aspects. Knowing how the family and business interact is an integral part of the process. We will work with your business in evaluating alternatives, developing a plan and then seeing the plan through to implementation.
In evaluating planning alternatives, we will work with you in considering:
- Succession to family members
- Succession to employees
- Succession to outside parties
Succession to Family Members
In planning for the transfer of business to the next generation, the following important items must be considered:
- Overall estate planning of the business owners
- Utilization and optimization of gifting where appropriate
- Utilization of trusts as a vehicle for transfer
- Life insurance
- Buy-sell agreements and shareholder agreements
- Family limited partnerships
- Retirement income planning of the owners
- Capital and financing needs of the business
Succession to Employees
For many closely held businesses, the sale of the business to one or more key employees is often a viable succession strategy. We will assist you in considering identification of key employees as potential owners, deferred compensation agreement for key employees, management buy-outs (leveraged buy-outs) and ESOPs (Employee Stock Ownership Plans).
Succession to Outside Parties
Our professionals have extensive experience in mergers, acquisitions, purchases and sales of businesses. We will assist you in evaluating stock sales, asset sales, income tax implications, identification of potential investors/purchasers and identifying "strategic value" of your business.
Valuations
Regardless of the direction which your succession plan takes you, having an understanding of the value of your business is critical, whether it be for potential gifts or estate ramifications or in determining the value of your business for sale to outside parties. We have extensive experience in business valuation services and our professionals have received the highest designation accredited through the American Institute of Certified Public Accountants. Many factors will be considered in the preparation of a business valuation including the following:
- History of business and economic outlook
- Market-based analysis
- Asset-based approach
- Earnings-based approach
- Discounted future cash flow
Regardless of the succession plan most appropriate for your business, it is critical to begin the process and carry it through to implementation. Following are some scenarios which unfortunately occur as a result of the lack of a good succession plan:
- Sale of family business to pay estate taxes
- Disputes among family members over business ownership
- Business failure from lack of management continuity
- Payment of excessive income taxes which might have been avoided
- Business failure resulting from inadequate financing or capitalization
Throughout the long history of our firm and our predecessor firm, Jacob Schulman & Company, our services to our clients have gone far beyond the customary accounting and income tax services. Through the close personal service we provide to our clients, we address all areas of financial planning. A natural progression to this planning is the wealth preservation and succession planning of the closely held businesses which we service.
