Area of Practice

Business Succession Planning

Succession planning refers to transferring leadership and management responsibilities to another individual or group. Within a business environment, succession planning creates a plan for stabilization through change–so that companies continue to operate effectively and without interruption, when key personnel move on to new endeavors, retire, or pass away.

Our Services Include:

  • Formation of entities
  • Buy-sell agreements
  • Shareholder Agreements
  • Non-qualified Employee Benefit Plans
  • Mergers and Acquisitions
  • Corporate Spinoffs
  • Divestitures

We assist business owners, leaders, and entrepreneurs in designing and implementing transition strategies for a successful business transition. The process of succession planning is complex and requires time, concentration, and resources–and the options for succession planning vary. There are multiple routes businesses can take including ESOPs, public trade, or private shares–each having its advantages and disadvantages on the current and future state. Businesses take years to build and months to take away. Implementing a thorough succession plan checks the right boxes and puts a foundation in place for a business to maintain operations in a balanced manner through critical transitions.

Common Questions On Business Succession Planning

Business succession planning is essential to secure the operational transition of your business and legacy. Below are some common questions around succession planning and if you have other questions, contact us today!


How do I transition my business to my children?

Determining when and how to transition your business to the next generation is an exciting—and complex—process. Whether you’re ready to retire or are simply planning the next steps, transitioning business ownership to your children requires a formal, written plan that includes your goals and detailed steps of transition. You have a couple of legal options when leaving your business to your children, including how you’ll distribute the assets to them, whether through the sale of the business, merger or acquisition if your child owns another business or additional shareholder agreements.


Do I need a buy-sell agreement?

Sole proprietorships, partnerships, and closed companies employ buy-and-sell agreements to ease ownership transitions when a partner dies, retires, or leaves. The purchase and sell agreement entails selling the business share to the corporation or the remaining members according to a formula. Estates must sell after partner deaths. The surviving partners get life insurance policies on each other’s lives, which the firm may pay for as a business expenditure. The beneficiaries are the partners. The remaining partners will utilize the life insurance death benefit to buy the deceased’s shares from their estate, assuring business continuity and ownership structure. A buy-sell arrangement prevents expensive probate court disputes with surviving spouses or children.


How do I convert from a C Corporation to an S Corporation?

If you wish to alter the tax status of your firm from C-corp to S-corp, you must file Form 2553 to the IRS, which must be signed by all shareholders. No later than two months and fifteen days after the beginning of the tax year, you must submit this form.


When is an ESOP appropriate?

An employee stock ownership program (ESOP) gives workers ownership interest in the company in the form of shares of stock, often based on the duration of their employment. An ESOP rewards employees who helped establish your business, provides supplemental retirement benefits outside of a 401(k) or other retirement plan, and incentives employees to help the business succeed. ESOPs are an exceptional benefit for employees that encourage increased dedication to the company, driving success for both the employee and the company. They also provide certain tax advantages for your business.

Determing if an ESOP is appropriate for your business is a large decision with various factors, including but not limited to: the type of corporation of your business, vesting and withdraw schedules and appointing a trustee to act in the best interest of the plan.

Case Study: Business Succession Planning


A closely held business owned by ten shareholders has had a long and successful run, growing revenues every year and distributing products throughout a large portion of the United States.


The business has in place a buy-sell agreement, but most of the management team is nearing retirement age. Several talented young executives have been mentored to run the business and many of the older shareholders want to simplify their lives and diversify their wealth. At the same time, the owners are concerned about the well-being of employees and do not want to sell to a firm that would fire existing employees and move the business to another community. Since none of the younger managers would be able to raise sufficient capital to purchase the business, other options needed to be considered.


After considering the options, the corporation elects to explore a potential sale to an Employee Stock Ownership Plan (ESOP). This would allow the company to be owned by its employees, but the ESOP Trustee would retain existing management and keep the business in the community. The shareholders will be able to roll over part of the sales proceeds on a tax-free basis into U.S. domestic stocks.

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