Why You Need A Business Transition Plan
Say, for instance, that your retirement plan is dependent on selling your business. With a carefully crafted business transition plan, you can help meet your retirement goals and successfully transfer your business.
Even if you are not depending on your business for retirement, you may be planning to transition it to family members.
A business transition plan may include a buy-sell agreement with your co-owners that outlines the terms of the sale, including triggering events and how and when the sale price will be paid.
If you plan to have family members take over the business, the buy-sell agreement should be a “bona fide” agreement.
If you plan to sell your business interest at retirement you may be keen on:
- Determining how and when the purchase price will be paid.
- Minimizing tax consequences.
- Improving the creditworthiness of the business.
- Leaving the business in good financial shape for the future owners.
- Being sure the purchaser will have the funds to complete the buy-out.
If your plan for family members to take over the business, you may also be wondering:
- How long do I stay on for a successful transition
- Are they familiar enough with the business and ready to take over management
- What about my children who are not involved in the business