Sapers & Wallack
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- Business Continuation Planning
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Business Continuation Planning
Secure the knowledge and leadership that drive your company’s success.
If the benchmarks of your company’s success are tied to its key people – those who create the innovations, lead operations, and build the relationships – then the risk of losing their expertise and vision should be a significant consideration in your corporate planning. When a key person is also an owner, the risks magnify.
Most companies think key person insurance and buy-sell agreements solve the problem. That view can prove shortsighted if the policy only covers the recruiting and training of a replacement. Some buy-sell agreements unavoidably place the company and the owner’s family in adversarial positions.
For closely-held businesses, continuity planning is a prime responsibility. The operative principle is to ensure that the business interest passes to key employees, shareholders or family members according to the owners’ wishes. We create ways to assure that family members, both active and inactive in the business, are treated fairly. Our comprehensive approach encompasses the many difficult issues that arise with the transfer of wealth, and is offered with great sensitivity toward family and partnership matters.
Business continuity planning is a complex process. Ownership agreements must be structured to protect a partner’s business interest and a family’s financial interest simultaneously.
Creative continuity planning sometimes involves business valuation which minimizes capital gains taxes and maximizes inheritance. For example, rather than putting a high value on a business for the purposes of a shareholder agreement, the value might be minimized for buy/sell purposes. The balance of the value would be provided through an income and estate tax free mechanism.
Have you developed a program to efficiently transition your business to the next generation?
The ultimate accomplishment of sustaining a family business over generations can be both exhilarating and stressful. Preparing family members to take control, preparing the founder to relinquish it, balancing the business and personal goals of active family owners and passive ones, and spreading the value of the company from a nuclear family to an extended one are all critical issues to address. While nearly every founder envisions the business as a multigenerational success, very few of them plan effectively for these and many others obstacles that must be faced.
A clear vision starts the plan. Clear goals and objectives encompassing all the complex tax, financial, and family issues will take the plan to the next level. The legal and financing components of the plan are analyzed, crafted, and implemented – not to mention managed closely over the long term to respond to change within the company, the family, and the environment. As a third-generation business, Sapers & Wallack has used personal experience in business continuity planning to assist our clientele. Our work involves the following:
- Buy and Sell agreements, design and funding.
- Creative business purchases using life insurance.
- Employee Stock Ownership Plans (ESOPs).
- Inheritance equalization.
- Key person insurance.
- Loan indemnification.
- Planning for tax-efficient business transfer at retirement, death, disability or termination.