Succession Planning and Creating Exit Strategies

One day you will need or want to exit your business, through retirement or sale. Succession planning covers the key steps to prepare for that moment.

Simply put, succession planning is the process of transferring ownership from one group of owners and managers to another. Whether the transfer is to family members, key employees or third parties, the plan must align your personal, family and financial objectives.

Developing and implementing a well-designed succession plan and exit strategy is essential—whether your goal is to ensure the survival of a business from one generation to the next, or to maximize the after-tax proceeds from the sale of the business to a third party.

The planning can never start too early. Some decisions, such as the form in which you decide to do business, must be made early in the life of the business. Some other key areas that RINA can assist you in evaluating and developing include:

• Considering goals for the succession of your business
• Preparing an estate plan that minimizes transfer taxes at death as well as on lifetime transfers
• Implementing a loss prevention program that includes adequate liability and property insurance for all risks
• Reviewing key intangible assets so that they are protected by agreements or appropriate registrations
• Planning a testamentary transfer that reflects family needs and the business owner's wishes, one in which all interested parties are aware of the planned disposition of business interests and estate plan
• Assembling a solid team of advisors that includes an attorney, insurance consultant, banker or financial advisor, accountant and tax advisor who can assist the business owner’s management team and family coordinate the complexities of succession planning
• Ensuring that the current value of the business is supported by appropriate documentation and valuation studies
• Making sure that accounting records are current and internal controls are in place to safeguard assets
• Reviewing depreciation and accounting methods in order to maximize annual after-tax cash flow from operations
• Minimizing taxes on transfer and during ownership in order to enhance the after-tax proceeds received by the business owner

There is a lot that you can accomplish with the assistance of your tax, accounting and other advisors in order to increase the value of your business while you own it as well as when you transfer it. The return on an investment of time and resources in this area is often repaid to you many, many times over when it comes time to sell or transfer your business.

For more information about our services, contact:

Pamela Raumer, Business Development Director
praumer@rina.com