Succession Planning
For Family Businesses In The Aftermarket
This will be a special seminar held in conjunction with the 2011 SSA Annual Convention to be held this year at the Sanibel Harbour Resort & Spa, a Marriott property in Fort Myers, Florida.
Taking Care of Family
Taking Care of Business
The family-owned business is the oldest form of business organization known. Today, they are recognized as important and distinct participants in the world economy.
According to the Small Business Administration, about 90% of American businesses are family owned or controlled. Ranging in size from two-person partnerships to Fortune 500 firms, these businesses generate about half of the nation's Gross National Product.
Family businesses may have some advantages over other business entities in their focus on the long term, their commitment to quality (which is often associated with the family name) and their care and concern for employees. But family businesses also face a unique set of management challenges stemming from the overlap of family and business issues.
- Only 40% of family owned businesses survive to the second generation, 12% to the third and 3% to the fourth.
- Family owned businesses account for 60% of total U.S. employment, 78% of all new jobs and 65% of wages paid.
- Among the companies listed on the Standard & Poor's 500 Index, 34 percent are family businesses.
- Nearly 40% of family businesses in America will be passing the reigns to the next generation over the next 5 years.
- There are 1.2 million husband and wife teams running companies today.
- 55% of CEOs due to retire within 5 years have not yet chosen their replacement.
Often, business owners are busy dealing with day-to-day issues and end up failing to attach enough importance to planning for their succession. Common reasons include resistance by the owner to let go of the reins, fear of retirement or inability to find or choose an effective successor. Transferring ownership can be highly emotional and complicated, which is why often it is ignored until it becomes a pressing issue.
This one day seminar will assist you in various aspects of your own succession planning. It is never too early to start planning. Unforeseen events often cause a rapid (and frequently poorly planned) transition of the family business. Clearly, the longer the succession plan is in place, the smoother the transition will be.
It's never too early to begin planning for succession.
A family business owner's decision to retire is not as simple as no longer going to the office. Key questions need to be answered before the family owned business owner can "leave" the business:
- Will he or she have enough money at retirement?
- Who is going to own and manage the business?
- How will ownership and management be transferred?
- Should the business be carried on or sold to a third party.?
A proper business succession seeks to alleviate or lessen these issues by setting up a smooth transition between the current business owner and the future owners of the business. Succession planning can be broken down into three distinct categories:
- Ownership
- Management
- Tax Consequences.
Putting off business succession planning is a mistake. A proper succession plan can help ensure that your retirement needs are met and that the business you worked so hard to build will continue to flourish for years.
THE PROGRAM |
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7:00 |
Check in/Continental Breakfast |
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8:00 |
Welcome |
Rick Sheehan, SSA President Gordon Botts ACOFAS Chairman |
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8:15 |
The Succession Planning Process |
Bill Wade Wade&Partners |
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9:30 |
Break |
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10:00 |
Aspects Of Buying/Selling A Small Business |
Tom Marx and Paul Cooperstein Marx Group Advisors |
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11:30 |
Today's Workforce – What They Really Want |
Jim John Northwood University |
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12:00 |
Lunch |
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1:00 |
Business Succession With An ESOP |
Michael Holzman Morgan Lewis |
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2:30 |
Break |
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3:00 |
Breakout Sessions |
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Succession Plans |
Bill Wade |
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Selling A Business |
Tom Marx |
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Creating an ESOP |
Michael Holzman |
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6:00 |
Reception |
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The Succession Planning Process
by Bill Wade
Family business succession planning is a process in which a business owner passes the business off to someone within the family, either in management, ownership, or both. Like any business planning process, family business succession planning will vary, depending on numerous factors.
Succession planning should be part of a company's recruitment and selection process. High-level management should agree to this process and take part in it. The succession planning process will vary, depending on the type of company. Some of the steps might include:
- Create an organizational strategy. This involves identifying the number of people required for positions in the future.
- Identify the skills, values and personality traits that employees (and relatives) should possess to obtain these positions.
- Develop tools to assess potential candidates, such as performance reviews, tests and interviews.
The current owner and the potential new owner should:
- Evaluate whether this is the best option for the business.
- Create an in-depth plan and have it reviewed by everyone involved in the planning process.
- Closely monitor the plan as it unfolds. Be flexible and make adjustments as necessary.
- Incorporate tax planning and estate distribution in the plan.
When you're working with family members in your business, you can't solve problems by simply saying, "Go to your room." It's for good reason that business owners today spend millions of dollars on books, seminars and outside consultants trying to solve some very basic problems.
Aspects of Buying/Selling a Small Business
Tom Marx and Paul Cooperstein
70% of all small and mid-sized businesses never sell after they are put on the market. Selling a business is not like selling a piece of real estate or any other type of asset.
This session is designed for small and mid-sized owners who are thinking of selling their business and need to know how to prepare and follow-through the right way to successfully value their business.
Questions to be answered include:
- What Paperwork & Information To Get Ready Before Going To Market
- Why Understanding Your Tax Returns & Financials Are So Important
- How To Value Your Business To Sell Using Various Techniques
- Why Financing Could Be Important To Your Deal Structure
- What You Should Look From A Broker Or Agent
- Understanding Business Buyers & What Is Important To Them
- Why Non-Disclosure Agreements Are Important & What They Should Say
- How Deals Are Usually Structured & Why
- How To Market A Business For Sale To Get The Price/Terms You Want
- What You Should Expect From Buyers & Why Backup Offers Are Critical
- The Closing Process: Escrow, Transition Issues, & Closing The Deal
Business Succession With An ESOPs
Michael Holzman
An ESOP is a dynamic, tax-qualified employee benefit plan that offers great advantages to business owners, management, and private equity investors, as well as employees.
Why should you learn more about ESOPs? As a business owner, you may qualify for significant tax benefits when the time comes to sell or refinance your business or to diversify your personal wealth. ESOPs can also provide major benefits to your employees.
- Introduction – The Magic of ESOPs
- How ESOPs Work
- General Description of ESOPs
- Special Provisions Applicable To ESOPs
- The Tax-Free Rollover
- Leveraged ESOPs
- Dividends-Paid Deduction
- ESOPs for S Corporations
- Potential Problems and Pitfalls
- Conclusion—Putting It All Together
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