Orlando Florida attorney L. Reed Bloodworth is managing partner of Bloodworth Law PLLC with offices in Orlando and Winter Haven.
Reed is a 2019, 2020, and 2021 U.S. News and World Report Best Lawyer in Commercial Litigation. Bloodworth Law, a 2020 and 2021 U.S. News and World Report Best Law Firm, has seen businesses struggle after the sudden death of a business owner.
A Sucession Plan Ensures the Future of Your Business
A succession plan is a strategy to prepare a business for all contingencies including the owner’s death, a partner’s divorce, incapacity, partner buyouts, selling the business—or parts of it. A succession plan ensures the future of your business.
Usually, the battle begins when it’s discovered that there is no succession plan or operating agreement outlining the future of a business. A business succession plan should answer all of the following questions:
- What is your business worth?
- Can you protect your children?
- Can you protect my spouse?
- What if you get divorced?
- Who is your successor?
- What happens to your business partners?
- Can you prevent relatives from inheriting your company?
- How will your business be transferred to heirs?
- Or, will your business remain with partners?
- What happens to your company if you are incapacitated?
Why Should You Have a Succession Plan?
A business succession plan ensures that businesses run smoothly after company CEOs, owners, partners, key employees die, leave for other reasons, or, retire.
This can effectively prevent the possibility of an external takeover due to cash flow problems or the need to sell a business or other assets to cover the cost of the deceased’s interest.
Within an effective business succession plan is the complete understanding of crucial positions, business management, product and service knowledge, company knowledge, business relationships, organizational plans, marketing, and sales plans.
Having a plan for turning business ownership over to the next generation of business leadership ensures seamless management, revenue, and talent within the organization.
The succession plan can allow for timely settlement of the deceased’s estate, including avoiding probate and eliminating estate tax.
What If You Don’t Have a Succession Plan?
If you don’t have a succession plan and a CEO is incapacitated, the company may be unable to function. There’s no legal consent granted, nor leadership defined.
What will you do if your partner or partners decide to retire early, get divorced, or sell their part of the business to someone you don’t trust?
Are you grooming someone to take over for you because you want to retire? Will your partners be in favor of this new person leading in your place?
The answers to these questions should be decided in a business operating agreement which should include a clear succession plan. Talk with Reed about how Bloodworth Law can help you to establish a succession plan for future of your business.Consider sharing this post