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
GROUP OF RKL LLP
Business owners considering or just
starting the succession planning
process should ask themselves the
* 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
Services Group of
* 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
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
* 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
* Recruit outside employees as needed to support
* 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
~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
* The sale of the business may be an option to provide income for current ownership and maintain
business viability over the long term.