Business Succession Planning When looking at a closely held business owner’s estate, the business interest is often the single largest asset. It is often used to provide the majority of current income and support to the family, and will be looked at as a source of income in retirement and a legacy at death. At some point, a business owner will have to leave his or her business, either voluntarily or involuntarily. Although a business owner can’t always control when they will leave their business, they can control several aspects of their departure. If you ask a business owner, he or she would prefer to control how much and how quickly they will get paid for their business interest upon their retirement, death or disability. Additionally, any remaining owner(s) will also want control over who may become future business partners, or the purchase price and the terms of payment of any interest that they must purchase. A business owner spends a lifetime building their business, and they plan on that business being their legacy. That is why they need to create a plan today so their families will not have to be burdened with the business after the owner’s death. Establishing an effective business succession plan may involve the use of a buy-sell agreement. A buy-sell agreement is a legally binding contract that requires one party to sell and another party to buy a particular ownership interest in a business in the event of death, disability, or retirement of an owner. A well-written agreement can provide an important degree of certainty for a departing owner, the remaining owners and their respective families. The agreement should create a market for the business interest and the ability to convert it into cash at a price negotiated in advance when the exiting owner was in a reasonable bargaining position, since neither owner will know if he will be buying or selling. It gives the departing owner control over his ability to trade the interest for cash, the price that will be paid and the payment terms. It also gives the remaining owner(s) control over future business partners. Travers & Associates has successfully helped many business owners devise well-structured business succession plans. These plans have helped to insure the longevity and success of these businesses for many years down the line. Contact our office today to learn more about how one of our associates can establish a plan that is right for you and your business.