A successful small business is rightly a point of pride. It means that plans were made, risks were taken, and sweat equity was liberally invested. When things go right, the resulting enterprise may become the livelihood of the founder and members of his family. After the hope for initial success, the founder’s greatest desire may be for the business to continue after he is out of the picture.
This is easier said than done. Business “succession planning,” as it’s called, can be complicated stuff. But it can also be vital to ensuring that the business continues if something unexpected happens to an owner.
There may be only one owner who simply wants to leave the business to a family member. In this case, the owner should have a Last Will & Testament that includes a specific bequest of the business to the family member in question.
If, however, there are multiple owners and one of them dies, the surviving owners may want to purchase the decedent’s share of the enterprise. If this happens, how will the value of the late owner’s share be determined? And where will the survivors come up with the money to buy it?
A well-thought-out succession plan will address questions like these.