A Note From Paige
Thank You for Letting Me Serve You Since 2009!
May 29th is the seventh anniversary of The Law Office of Paige Arden Stanley! I am so grateful for all of the fantastic clients and contacts I have met, worked with, and interacted with over these past seven years.
I strive to provide service to clients in the same manner I would like to be treated. To that end, I have attempted to maintain a small firm environment and a level of personal service that stands out in our large city of Atlanta.
Thank you, once again, for all the support you have shown me. Your friendship, referrals, and guidance have helped me get to this point—I look forward to growing my firm with you, your families, and your friends.
(Image courtesy of Becris at FreeDigitalPhotos.net)
Plan for Business Success(ion)
Starting a new business is an exciting endeavor that requires an idea, lots of planning, filing the right forms with the Georgia Secretary of State, and—of course—having an attorney properly draft the necessary documents. While most business owners probably have a good idea about how they want to run their business, many don’t think about how they’re going to end it. Thinking about the end of a business may not be particularly fun, especially for a new business owner, but it’s important to plan ahead. In the same way that you can use a will or a trust to prepare for your personal future, you can use a business succession plan to prepare for what will happen to your business when you retire or otherwise step down from your role as owner.
This month, I will provide a basic overview of business succession planning, including what it is, how it helps businesses and business owners, and how to begin the planning process.
What is a business succession plan?
A business succession plan outlines what will happen to your business upon certain event(s), such as your retirement, incapacity, or your death. You can pass your business along to a successor, sell your business, or dissolve it entirely—the choice is up to you and any business partners with an interest in the business. Bear in mind, however, that planning is key.
What does a business succession plan look like?
A business succession plan can take several a variety of forms and names, including a buy/sell agreement with business partners, a section in an operating agreement, or a separate, self-contained document. Some business partners want to include their succession plans solely in their wills or trusts; however, I do not recommend this course of action.
How does a succession plan help business owners?
A succession plan has several benefits for both business owners and the business itself:
- It minimizes the potential for a fight over the future of the business. By detailing how a business owner wants to pass along his or her business interest, the succession plan can prevent a battle between family members, a business partner, and other parties with an interest in the business.
- It provides for a smooth transition of business interests from one party to another. A solid succession plan will allow the business to remain active during the transition period without being disrupted. In contrast, a succession plan that is part of a will—and, thus, has to go through probate—might disrupt the business’s activity.
- It protects the business owners’ (and/or partners’) interests. Because each business partner will participate in putting together the succession plan, he/she can ensure that his/her wishes are included. And unlike a will or trust, a succession plan cannot be unilaterally revoked or amended by one party, thus ensuring that one party does not have the sole power to change the plan to the detriment of his or her other partners.
- It creates an exit strategy. Not every retirement is planned—a business owner may suffer a disability or die suddenly, and without a succession plan in place, his/her business can fall into disarray as the remaining partners or family members are forced to cope with the sudden loss and lack of planning. Thus, an exit strategy should be planned.
Creating a succession plan can be a long, detailed process, so the earlier a business owner begins succession planning, the better. Here are some tips for getting started:
- Start Early: A good time to start thinking about succession planning is while you are putting together your personal estate plan.. My estate planning binders include a section about business interests that can serve as the starting point for our discussion regarding your business succession plan. Additionally, starting early allows you to take your time to consider your options and create a solid plan.
- Figure out your long-term business goals. Determine, if you can, whether you want to turn your business over to a family member or another trusted individual, or whether you want to sell the business.
- Identify Potential Successors. If you'd like your business to continue, you’ll need a successor. Do not assume a spouse or a family member wants this responsibility. Put together a list of people you would trust to manage your business—you don’t have to choose a successor immediately, but having people in mind will prevent you from scrambling to find someone. I advise my clients to have open discussions. It is often helpful to get an attorney involved to raise issues the parties might not otherwise consider.
A business succession plan sets forth your wishes for your business and helps minimize the potential for conflict during the transition period after you’re gone, much like an estate plan. Additionally, like an estate plan, it’s important to review your business succession plan and update it periodically. If you’d like more information about forming a business or succession planning, please contact me
. I can answer your questions and help you get started.