LancasterThriving_WinterSpring2017 - 21

Check out some tips from local experts to keep in mind
when beginning the succession planning process:
ACCORDING TO JOHN STONER, CPA,
CVA, PARTNER IN THE BUSINESS
CONSULTING SERVICES
GROUP OF RKL LLP
Business owners considering or just
starting the succession planning
process should ask themselves the
below questions:
* What is our most likely ownership
succession strategy? (i.e., family
transfer to next generation, transfer to John Stoner, CPA,
key employees, sale to outside party) CVA, Partner in the
* How much is our business
currently worth?

Business Consulting
Services Group of
RKL LLP

* What are the estimated after-tax cash
proceeds if we were to sell our business now?

* How well are we set financially for retirement, considering
the current value of the business?
* What is the preferred/likely timeline for
ownership transition?

Stoner notes that the answers to these key questions
will drive action items to help prepare for the succession
planning process, such as:

* Implement needed training and skills development for
the next generation of leaders

ACCORDING TO JEFF OUELLET, ESQUIRE,
APPEL & YOST LLP
* Be sure your business documents
have realistic payment terms for
buyouts of departing owners
(example - how much will be paid
immediately by the purchaser, as
opposed to how much is financed
whether by the purchaser or a bank).
* Define, in writing, obligations of
departing partners after they step
away or sell their business interest
(example - are they required to be
involved in retaining key clients?).

Jeff Ouellet, Esquire,
Appel & Yost LLP

* Work with your lending institution to make sure the
departure of an owner does not trigger a default under
any business loan documents.
* Make sure that your business, estate planning and
insurance documents all work together to accomplish
your goals.
* Appreciate the need for liquidity/the financial
commitment of ownership.

* Have a professional transition team - an attorney, an
accountant, and potentially a banker, insurance agent or
wealth manager.

* Recruit outside employees as needed to support
leadership goals

* Identify ways to increase business value and maximize
the transferability of that value
* Prepare transition plan after end of operational and
ownership involvement by key executives

ACCORDING TO KAREN MECK, MT, PRESIDENT, KBM CONSULTING, LLC
* Identify key employees and consider the purchase of key person life insurance to provide for
expenses that might occur for finding and training a replacement, covering business expenses,
and/or covering debt obligations.

* Carefully evaluate the options for future ownership. Among the myriad of questions to consider:
~Are family members interested and/or capable of taking over?

~Are key employees qualified and interested in an ownership stake?
Karen Meck, MT
President, KBM
Consulting, LLC

~How would those potential owners 'fit' with current management and staff?

* How will the transfer of ownership occur? Legal agreements for the ownership transfer, called
'buy-sell' agreements, should clearly specify to whom, the method and the cost of the transfer
of ownership. Consider the purchase of life insurance or other funding to facilitate the purchase of
ownership shares.

* The sale of the business may be an option to provide income for current ownership and maintain
business viability over the long term.

LancasterChamber.com

21


http://www.lancasterchamber.com/log.aspx?type=KWMB&rt=MEMB&url=www.appelyost.com http://www.lancasterchamber.com/log.aspx?type=KWMB&rt=MEMB&url=www.rklcpa.com http://www.lancasterchamber.com/log.aspx?type=KWMB&rt=MEMB&url=www.appelyost.com http://www.lancasterchamber.com/log.aspx?type=KWMB&rt=MEMB&url=www.rklcpa.com http://www.kbmconsultingllc.com http://www.kbmconsultingllc.com http://www.kbmconsultingllc.com http://www.LancasterChamber.com

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