Business Succession Planning
Westborough MA Business Succession Planning Attorney
For nearly 20 years, the Socius Law Firm has served a diverse client base of small and medium-sized businesses throughout Worcester County and Metro West Boston. And we’ve seen the impact of no business succession planning.
In the event of a key person’s sudden death, illness, or retirement, businesses are frequently left scrambling to find a suitable replacement. Working with a business succession planning attorney, your small business can establish a proper succession plan to avoid a chaotic transition.
Why Business Succession Planning Matters
A succession plan may be the single most important document for the successful operation and continuity of your business.
If you are an owner or shareholder, and do not have a succession plan in place, your stake in the company is either passed on to relatives as part of the estate, absorbed by other shareholders, or a combination of the two. In family-owned businesses, this often leads to disputes between siblings and other relatives. Those more active in the day-to-day operations of the business may feel entitled to larger shares than others who are less involved.
In other circumstances, employees and clients may leave the company for fear of instability. Additionally, without prior planning, remaining shareholders may not have sufficient resources needed to purchase the shares of the exiting or deceased shareholder. This can lead to a situation where a spouse or child of a deceased shareholder attains an ownership stake in the company which can result in disputes, stalling progress and possibly leading to a loss of assets. Furthermore, if the exiting shareholder had a management duty, her replacement may not be equipped to take over her role through such a delicate transition time.
How Socius Law Firm Can Help
As a Westborough business law attorney, Socius Law Firm offers expertise in business and estate planning to help owners and shareholders formulate a proper business succession plan that facilitates a smooth transition.
Socius’ Business Succession Planning Services are tailored to fit your business model and typically addresses the following goals:
- Keep the business or shares within the family. With a retention plan, a spouse, children, or other relatives can retain control of assets.
- Offer shareholders or vital employees a larger stake in the company. Interested parties stipulated in the plan will be granted the right of first refusal, or the ability to accept or reject the shares of the exiting or deceased owner before they are offered to individuals outside of the company. The price of the shares can be determined by a valuation mechanism agreed upon during succession plan negotiations. For example, a valuation mechanism may require that shares be offered at their prevailing market value, or require multiple professional business valuation appraisals.
- Address issues related to your estate plan as well as minimization of potential estate taxes.
- Preserve “institutional memory” when you or other current managers are no longer running the show. For example, you can empower advisors to aid the transition team and ensure continuity, oversee day-to-day operations, provide provisions for heirs who are not directly involved in the business, and provide education and training to family members and key employees who will take over the company.
- Establish measures to ensure the business has enough cash flow to pay taxes or buy out a deceased owner’s share of the company.
- Implement a family employment plan with policies and procedures regarding when and how family members will be hired, who will supervise them, and how compensation will be determined.
Other arrangements can be made that would transfer the owner or executive’s interest into trusts to be paid out to family members. Assets may also be divided among employees or in other cases, it may be best to sell the company.
With so many factors to consider in proper business succession planning, it is important that you choose an experienced business succession planning attorney who can understand all of the interests at stake and work with you to protect them.
Learn More About Our Westborough MA Business Succession Planning Attorney Services
Contact us or call us at our Westborough, MA office at 508-870-5759. The Socius Law Firm represents small-business owners and professionals throughout Central Massachusetts and Worcester County including the communities of Westborough, Southborough, Northborough, Hopkinton, Grafton, Shrewsbury, Upton, Marlborough and Framingham.