Tampa Business Succession Planning Attorney
Succession planning ensures that in the event of a business owner’s death, retirement, or decision to sell a company there will already be legal arrangements in place regarding ownership, management, and payment of taxes. Although it may not cross the minds of many new business owners when they first begin operations, it is important to create a business plan in advance of any accidents, sudden deaths, or economic insecurity. In the long run, drafting a business plan early can help avoid a stressful transition in the event of a key member’s sudden illness or retirement, contact our Tampa business succession planning attorneys today.
Retention Planning vs. Buy-Sell Retention Planning
When creating a plan for the future of their company, business owners often choose to create a retention plan, which ensures that a business and its shares will remain in the control of designated family members. This is a popular choice for smaller, family-owned businesses. Retention plans are usually created in coordination with a business owner’s estate plan. In fact, the plan itself can actually be written to transfer an owner’s interests into a trust fund created for the benefit of his or her family members.
Larger companies, on the other hand, usually choose to implement a buy-sell retention plan, which provides for the transfer of a business to another company, a business partner, existing shareholders, vital employees, or an unaffiliated third party. Those included in the plan are granted the right of first refusal, which means that they can either accept or reject the shares before they are offered to individuals outside of the company. To determine the value of the business, the owner will choose a valuation mechanism. For instance, a valuation mechanism could require that shares be offered at their market value or require professional valuation appraisals prior to the sale.
Regardless of the type of plan a business owner chooses to implement, he or she should consider certain issues, including:
- The specific process that a company must follow in the event of a death, illness, or the sale of the business;
- The designation of a permanent or transitional successor;
- Tax and financial considerations; and
- The interests of employees, creditors, and clients.
If an owner, executive, or shareholder does not create a succession plan, his or her stake in the company will either be passed on to relatives as part of his or her estate or absorbed by other shareholders. To avoid this, Florida business owners should hire an experienced Tampa business succession planning attorney who can assist them in creating a plan.
Call an Experienced Tampa Business Succession Attorney Today
Creating a business succession plan can be pivotal to a company’s continuing success after a business owner passes away, becomes ill, or decides to sell a company. Failing to establish a business succession plan can have devastating consequences, so if you are a Florida business owner and have not drafted an official business succession plan, please contact a member of the legal team at Bubley & Bubley, P.A. by calling (813) 963-7735 at your earliest convenience.