Family Business Succession

Better management succession planning results? Make better decisions! Regularly connect with your peers in a mastermind group and your management succession planning results will be more effective! Click Here to Learn How! now.

Succession Planning ABC

For a small business owner, succession planning is anything but simple or easy. Perhaps that’s why business owners so often avoid it. It’s another case of the longest journey beginning with a single step. In that spirit, these three steps can start you thinking about succession planning - clarifying the “why”, the “who”, and what to do:

A. Why?
A succession plan enhances the value of your business, whether you plan to sell, retire fully, or just step back. Your investment and years of hard work are better protected and realized with one or more strong successors. Your family and/or valued employees are protected, especially in case of disabling illness or accident, or your sudden death.

A succession plan helps provide continuity and confidence for clients, suppliers, and investors. It can also act as an employee retention and development strategy, and allows you to step back from day-to-day operations without selling or winding the business down.

B. Who?
A strong succession plan involves a team effort. Clearly, you need to take time to find and evaluate strong successors. Family, business partners, key employees and managers need to understand what is happening and why.

Next, get professional advisors involved. Lawyers and accountants, insurance and financial advisors, and business valuators bring specialized knowledge, options and practical strategies to the task.

According to experts in the field, emotional issues are among the top pitfalls encountered by business owners planning for succession or sale. Owners often avoid or delay planning due to anxiety about change, “letting go” and embracing a new role and identity. Having a business advisor on your succession team can help you sort out these personal issues, facilitate stakeholder discussions, maintain your “big picture” focus, and keep your plan on track.

C. What?

Knowing what your business has to offer is a key first step. Investors generally look for strategic assets, turn-key systems, strong management, good market positioning, and the promise of a profitable future.

For many businesses, a succession plan is a key driver of your business valuation. The process includes selecting and training successors, but also having a contingency plan if the original one doesn’t work out.

Thanks to the baby boomers, we can expect a flood of small businesses to change hands in the next decade. How many? According to CIBC, as much as $1.2 trillion in assets attached to some 500,000 Canadian businesses by 2010. The resulting over-supply of sellers and scarce number of buyers will surely affect many business valuations.

A succession plan can help your business stand out from the crowd. It can also mitigate the risks of a forced sale due to ill health, family disputes, industry shifts or market changes.

Preparing early simply increases your options.

The Canadian Federation of Independent Business (CFIB) has established that only 10% of business owners planning to sell have a formal succession plan in place. Thirty-eight per cent have only an “informal” plan, but 52% have no plan at all. That’s a recipe for some interesting times ahead!

To further help owners of small businesses clarify what they might need from a succession plan, the CFIB has prepared a list of questions for your consideration: http://www.cfib.ca/pdfs/succession_qa_e.pdf

Solid succession planning is not a quick-fix project. Depending on the size and complexity of your business, it can take several years to fully implement. Taking even one step today to start the process can make all the difference.

© Mara Osis, 2009

Mara Osis is the Principal of Amati Business Group, a collection of professional advisors dedicated to helping owner-managed small businesses “make their ideal real”. To subscribe to our free e-newsletter for business owners, or to get more information on how we work, who we work with, and the results our clients have achieved with us, please visit http://www.amatibusinessgroup.com

Article Source: http://EzineArticles.com/?expert=Mara_Osis

 

Technorati Tags: family business succession planning, Family Succession Planning, Management Succession Planning, Mara Osis, Succession planning

The new administration has made it pretty clear that taxes on the wealthy are going up. One particular area of focus, we believe, will be increasing the capital gains tax.

This article explores the impact on business sellers of this impending increase.

Thinking of selling your business? If you have planned it correctly, most of your transaction proceeds should be long term capital gains.

Given the current political climate and the upcoming change in the White House, capital gains taxes will come under attack.

If you are a business owner and are thinking of selling your business within the next 5 years, you may want to move up your exit timeframe says Dave Kauppi, President of MidMarket Capital, a Merger and Acquisition Advisor.

The reduced 15% tax rate on capital gains, previously scheduled to expire in 2008, has been extended through 2010 as a result of the Tax Reconciliation Act signed into law by President Bush on May 17, 2006.

In 2011 these reduced tax rates will revert to the rates in effect before 2003, which were generally 20%.

We believe that with the AMT currently targeted for elimination, the $800 billion will be made up by raising taxes elsewhere, and I believe this “owner of capital” tax is the most vulnerable for increase.

I expect that the long term capital gain tax rate will be moved to an upper limit of 28% by late 2010 for the high end income bracket.

Translation, the business seller is going to take a big hit on his after tax proceeds if his business sale is concluded after November 1, 2010.

Let’s look at a quick example. A 63 year old man started his business 25 years ago and he sells it for $5 million.

All his equipment has depreciated so his basis is approximately $0. Under current tax laws he would have a $5 million capital gain from the sale of his business. His after tax proceeds would total $4,250,000.

If he sells after November 1, 2010, and the tax laws change as I am predicting. The same sale would net him $3,600,000. He lost $650,000 because of this change.

If you wait until the actual change is voted into law, there will be a rush to the exits causing an unusually high number of businesses to be for sale. That would further reduce proceeds for the seller because of supply and demand pressures.

The most important tax issue, however, for the business seller continues to be the corporate structure (C Corp, S Corp, or LLC) and whether the business sale is an asset sale or a stock sale.

First, unless you are planning on going public or have hundreds of stockholders do not form a C Corp to begin with. Use an S Corp or an LLC.

If you currently are a C Corp ask your attorney or tax advisor about converting to an S Corp. If you sell your company within a 10-year period of converting to an S Corp the sale can be taxed as if you were still a C Corp.

Here is what happens when there is an asset sale of a C Corp. The assets that are sold are compared to their depreciated basis and the difference is treated as ordinary income to the C Corp.

Any good will is a 100% gain and again is treated as ordinary income. This new found income drives up your corporate tax rate, often to the maximum rate of around 34%. You are not done yet.

The corporation pays this tax bill and then there is a distribution of the remaining funds to the shareholders. They are taxed a second time at their long term capital gains rate.

Compare this to a C Corp stock sale. The stock is sold and there is no tax to the corporation. The distribution is made to the shareholders and they pay only their long term capital gain on the change in value over their basis.

The difference can be hundreds of thousands of dollars.

This anticipated change to the capital gains tax rates will certainly add to the complexity of selling a business.

I cannot stress how important a factor taxes will be in your successful business exit. Here is my summary checklist:

     Tax Consideration Checklist Get Good Advice on Original Corporate Structure

     If C Corp - Retain Ownership of all Appreciating Assets Outside Corporation - i.e. Real Estate, Patents, Franchise Rights: avoid double taxation.

     Look at Deal Economics First, Taxes Second

     Make Sure Your Transaction Support Team has Deal Experience

     Before You Go To Market, Work With Your Team to Understand Deal Structure vs. After Tax Proceeds

     You Have the Right to Pursue the Minimum Payment of Taxes - Exercise Your Rights

     It Is Never as Effective as an Afterthought

The Pros Can Match Your Desired Outcomes With the Right Tools. Be aggressive in your tax positioning of your sale, both with the buyer in your negotiations and with your filing with the IRS.

The various deal structure options are very important issues that need to be understood from a tax impact perspective. Remember that a deal term that is favorable to the buyer for tax treatment is correspondingly unfavorable to the seller.

You can bet that the buyer’s team of advisors is well versed on this topic. Make sure that your team of advisors is equally well versed or you could end up with a much less than you thought in after tax proceeds.

Dave Kauppi is a Merger and Acquisition Advisor with MidMarket Capital http://www.midmarkcap.com/exit providing business broker and investment banking services to owners in the sale of lower middle market companies. Subscribe to our free Exit Strategist Newsletter and receive a free report, Preparing for Your Business Sale The Exit Strategist

Technorati Tags: asset sale, business broker, capital gain tax in business sale, merger acquisition, sell a business, stock sale, tax impact

Randy Siller, is partner of Siller & Cohen, a family wealth advisor firm involved with wealth transfer, investments and business succession. VideoChat with Caryn A. McBride explores a range of topics and issues affecting the business community in Westchester. Caryn A. McBride is Executive Editor of the Westchester & Fairfield County Business Journals & Hudson Valley Business.

Duration : 0:2:28

Continue Reading »

Technorati Tags: Caryn, Chat, McBride, Randy, Siller, Tax, Tips, Video

Created by Old Skool @ Stetson University in 2008 as part of Campus MovieFest, the worlds largest student film festival. Learn about the dynamics of working in a family business. We will explore the typical family business issues such as succession planning, dealing with outside employees, and the rules of seduction as demonstrated in this short film.

Duration : 0:4:35

Continue Reading »

Technorati Tags: Campus, CMF, MovieFest, Music, No

The economy is the one subject that seems to have an impact on every business that wants to attract more clients.  A recession can even have an effect on solo attorneys and small law firms.
 
How can this be?
 
People still need legal assistance even in a difficult economy, right? Contracts still need to be written. Businesses still have problems. Why would things ever slow down for a small law firm?
 
Yes, it is true that the law moves forward in good times and in bad times. But, getting high-quality referral clients becomes a challenge for solo attorneys and small law firms during a recession. Referrals dry up in an economic downturn because many small business owners are not seeing as many clients as they have in the past. Since they don’t see as many people, they may not hear of as many issues that could be relevant matters for your firm. Indirectly, the downturn in business for your referral partners may result in a lack of referrals to your firm.
 
Here Are 5 Low Cost Ways to Combat the Recession and Attract More Legal Clients for Your Small Law Firm
 
1. Differentiate Yourself
 
As times get tougher, many people will “dabble” in your area of expertise. Make your prospective clients aware that this is happening. Remind your clients that you do not handle issues in your specialty on a part-time basis. If you are a criminal defense attorney, explain to them that you are not a real estate attorney who takes a few criminal defense cases each year to “fill out his calendar.”
 
The reason people chose you in a good economy is more important in a down economy. There is more competition out there. Focus on your unique value proposition and hammer it home.
 
You must be able to articulate clearly why you are the best choice for this client in this situation. Now, more than ever, your unique value proposition is critically important. Make sure you highlight it as often as possible.
 
2. Help Clients Understand the Consequences of Bargain Shopping
 
The client receives no bargain from parachute manufacturers, heart surgeons, or legal practitioners. Paying less often means not getting the best work. Your prospective clients must understand this, and you are the best person who can bring it to their attention.
 
Help prospective clients focus on their own PERSONAL economy. What consequences are they likely to face if this work is botched? What is their exposure? If this situation is not handled, how much will they suffer? Do they want to face this possibility armed with the best possible representation? Or do they want to take a big, big chance with someone else?
 
3. Work Your Contact Lists
 
Every lunch you eat by yourself is costing you money. You need to stay in front of the people who know you so they remember to refer clients to you. While many people may not come into daily contact with friends or relatives who need your services you never know when they may hear of someone who needs legal assistance. If you are on top of mind they can offer to connect them with you. This happens more often than you realize.
 
The best way to get these referrals is to sit down with people and get to know them. Breakfast or lunch (and often dinner) provides the perfect opportunity to breathe new life into a potential referral relationship.
 
Here’s how this could work:
 
Invite long-time clients to lunch. Find out how you can help them by providing some referrals to  their business. They will almost always want to reciprocate if possible. The more you give to them, the more they will want to help you.
 
4. Keep Your Name in Front of Everyone You Know Every Month
 
Monthly greeting cards are a terrific opportunity to keep your name in front of people. Every month has a holiday that will serve as an excuse for mailing your entire contact list. The more creative and memorable your message the more likely your contacts will refer you.
 
If this seems goofy (after all, who gets a greeting card from an attorney?), remember that being different is the point. For example, one side of your card can say something like: “All of us at XYZ Law Firm wish you a safe and happy Halloween. Thanks for thinking of us.”  On the opposite side it could say: “We help people who are being chased by real goblins, monsters, and other scary creatures waiting to attack your business (or your bank account).” Below this message, you print your contact information.
 
The key is not to be overtly solicitous. You want to remind people what you do and thank them for thinking of you.
 
Greeting cards are cheap, easy and effective way to attract more legal clients.
 
5. Media Exposure Can Make a Difference
 
Getting your name and face in the local media can make a difference in attracting  new legal clients for your small law firm. You may not get clients from actually appearing on television or being quoted in an article, but media outreach can help enhance your credibility.
 
Prospective clients often view media exposure as a surrogate for expertise. Giving a few interviews or commenting on a few out-of-town cases for a local reporter will help keep your name in front of clients and it will position you as an expert.
 
There is no reason your law firm should suffer in an economic downturn. People still need assistance handling legal matters. The challenge comes when your referral sources have reduced their business contacts because the economy has slowed down. The key to survival and success lies in expanding your reach. Develop these good habits now and you will attract more legal clients for your small law firm during a recession.
 
Dave Lorenzo teaches solo attorneys and small law firms how to attract more legal clients and make MORE MONEY with LESS EFFORT. To learn how to build a big roster of clients with little marketing dollars and get FREE access to Millions of Dollars of Practice Building Strategies at no cost to you, go to http://www.rainmakerlawyer.com/site/register

Technorati Tags: family business succession planning, Family Succession Planning, make MORE MONEY, Management Succession Planning

http://discassessment.org
This video explores the top ten strategies to keep your good people. Companies are realizing that the talent pool is rich, however, every organization needs to attract and retain these individuals. The suggestions put forth are obvious; as with many things. it’s the obvious that eludes us. DISC and PIAV essments along with prescriptive corporate coaching will allow workers to succeed.

Duration : 0:5:30

Continue Reading »

Technorati Tags: Assessments, Behavioral, Business, Coaching, Communication, DISC, PIAV, Planning, Profile, Succession, Values

Tim McConnell, SPHR & HR Strategist with McConnell Consulting Ottawa discusses Succession Planning Principles & Guidelines. A key aspect of overall HR Planning is having a systematic process for defining future management requirements, identifying candidates and matching this demand to supply as a basis for future planning. More information and a wide range of HR articles available at www.mcconnellhrc.com McConnell HR provides Compensation and Human Resources Strategy advice to clients in both the public and private sectors.

Duration : 0:8:26

Continue Reading »

Technorati Tags: HR Planning, HR Strategy, Human Resource Planning, Management Depth Review, Management Development, Succession planning

12 future of private banking
http://www.globalchange.com Future of private banking and wealth management for ultra high net worth individuals. Fund management, et creation and fund growth. Portfolio management and managing risk in balanced distribution of ets. High rates of return. Succession planning and how to run family offices. Specialist wealth advisors and independent financial advisors, commissions and fee-based advice. Philanthropy and philanthropic advisory services. Why charitable activities are so important to high net worth families and why most want their own charity foundations. Making a difference, proving added value and real social impact, Applying business principles and measurable outcomes to philanthropy. Venture philanthropy and social entrepreneurs. Making philanthropy work in a disciplined way with formal evaluation and monitoring. Financial disciplines and specialist advisory teams. Video by keynote conference speaker Dr Patrick Dixon, Futurist and author of 12 books on global trends including Futurewise and Building a Better Business.
Private banking, investment banking, wealth management, portfolio, balanced, philanthropy, charitable foundation, social action, advisory services, independent financial, planning, financial, finances, banks, investors, funds, fund managers

Duration : 0:5:54

Continue Reading »

Technorati Tags: action, balanced, banking, charitable, foundation, investment, management, philanthropy, portfolio, Private, social, wealth

www.enhancelearning.co.in

Challenge: Nestle India required a tool with which they could carry out detailed succession planning for various departments within their factory.

Solution: We developed software for the Nestle factory at Moga in India for replacement planning and career management. The software provides detailed information like department organogram, factory organogram, individual and personal details including their competencies and skill level. All this information is used to carry out succession planning and to identify who will replace who.

Duration : 0:2:41

Continue Reading »

Technorati Tags: Computer-based, elearning, FMCG, Industry, Training

Randy Siller, is partner of Siller & Cohen, a family wealth advisor firm involved with wealth transfer, investments and business succession.

Duration : 0:0:46

Continue Reading »

Technorati Tags: advisor, and, Business, cohen, Family, firm, investments, Randy, Siller, Succession, transfer, wealth