Business Guidance

Business Owners – You NEED a Succession Plan

Time passes so quickly. It won’t be long before many of us “baby boomers’ will have to consider the next transition in our careers. In the world of business financing, this is a particularly important topic for many of my customers who are the owners of privately held companies. Whether it’s planning a transition to family members or a sale of the company, your exit strategy should be defined and planned well in advance. There are many things to consider when planning your transition. Here is a quick review of the key things you should consider.

Why is a succession plan important?

As an owner of your company, you owe it not only to yourself, but also your family, employees, and customers to prepare for a smooth transition of your company. Planning in advance gives you the opportunity to maximize the value of your company, train the next generation, if necessary, and assure your customers that they can expect the same great products and services from your company

When is a good time to start?

It is considered best practice to prepare your succession plan five to ten years in advance. This would give you significant time to take all considerations into account. While this is ideal, it may not be possible for everyone. Any advance planning is better than none.

What is your exit strategy?

There are many options for you as an owner to maximize the value of your company such as:

  • Transition to family members
  • Sale to third party
  • Sale to management
  • Sale to employees through an ESOP

Each of these options has their advantages and disadvantages. You will need to work with an attorney and accountant to consider tax strategies, your continued management involvement, employee continuity, insurance options, and trust structures.

After building a successful business, it is difficult to decide when you should pass your business into new hands. By planning in advance, you can create a legacy through thoughtful planning that can perpetuate your business for many years to come. To find out how Univest can help with your succession planning, please contact us at 877-723-5571.

Univest Bank and Trust Co. is Member FDIC