Overland Park Attorney

Succession Planning Lessons From Taiwan

Analysts fear for the future of the Taiwanese economy because of the failures of large family-owned businesses to come up with workable succession plans.
Family-owned United States companies can learn some lessons from the potential crisis.

In Taiwan it is normal for even extremely large multinational businesses to follow the traditional Chinese model: one person founds the business and continues to run the day to day operations. When the founder passes away, the business is divided between the founder's surviving family members. Many family-owned businesses in the U.S. have a similar plan. However, as the BBC Newsreports, in a recent article titled “The tricky business of succession planning in Taiwan,” succession planning in Taiwan usually stops there.

 No one is certain who exactly will run the business in Taiwan when the founder passes away. As the founder does not delegate any authority to possible successors, no one is even capable of running the business. Other businesses have trouble, usually because siblings do not get along and cannot agree about how the businesses should operate. Because approximately 90% of the businesses in Taiwan are family-owned this is a big concern for the nation's economic future.

 This is not just a problem for companies in Taiwan. Many family-owned businesses in the United States make the same mistakes. Leaders often are loathe to delegate responsibilities to successors before they are ready to retire. Many family-owned businesses do not plan for how siblings, who will be co-owners of the business, will divide responsibilities between themselves. If you own a family business and you want it to survive to the next generation, then it is vital that you make a business succession plan a part of your overall estate plan. Your family and employees need to know who will be in charge after you, and the person you choose needs to be up to the task before he or she takes over.

 Contact your estate planning attorney who can coordinate the effort with you accountant and financial advisor. You can take action now to ensure your family-owned business will survive you.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website. 

 Reference: BBC News (July 30, 2014) “The tricky business of succession planning in Taiwan”

 

The Market is Heating Up! Is it Time to Sell Your Business?

If you’re a business owner, chances are good you’ll get some of those calls [from potential buyers of the business] too. The M&A market is heating up…

Sometimes it’s hard not to think about your business as an inherent part of your life. It may or may not be your life’s work, but it is certainly the lion’s share of your everyday life’s work. Nevertheless, there comes a time when it’s worth selling the business and also a time when the market is right. The M&A market is heating up, so is the time right for you too?

The M&A market is fickle, but currently seems to be on an upward swing. A recent article in Forbes reports that this swing seems to be catching even middle market companies. The article has a catchy title, too: “Why More Entrepreneurs Will Get A Phone Call Worth Millions.” 

As a business owner it’s important to think of the business as a business and (again) maybe your life’s work. On the other hand, it is also just as important to think of it as a marketable asset when it comes time to exit. After all, the business is likely to be your greatest asset and the cornerstone to your retirement, in one form or another. In addition, your business likely is part of your legacy to your children, whether as a family business succeeded into or as wealth transferred.

How will you choose to exit and when? How does this fit into your overall plan? Whether you pull the trigger or not, it’s worth watching the M&A market and ensuring that the business is appropriately structured for sale or succession.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website. 

Reference: Forbes (May 31, 2014) “Why More Entrepreneurs Will Get A Phone Call Worth Millions”

 

 

Preserving The Family Business In Overland Park, KS

Family businesses account for much of this country’s domestic product and are core to the American Dream. Whether it is a century-old international automobile manufacturer or a group of local dry-cleaners, family involvement in the business is a common goal. Like anything worth keeping, it takes work to preserve.

A business is not merely a thing. No, a business is a mindset, an activity and, oftentimes, even a lifestyle. It can get complicated. If your legacy is the family business, then with great responsibility comes the need for equally careful planning, preparation and dialogue.

Because every business is different, as every family is different and every individual is unique, what is right for a family business is something to be figured out and understood. That said, businesses have been coming and going for generations. Some have transferred successfully and others less so. Consequently, there are some tried and true strategies to consider when planning for your own family business succession.

Whether your objective is a sale, windup or succession, Forbes has provided a practical roadmap in a recent article titled “Six Steps For Making Your Business A Family Legacy.”

Here are the six steps by heading alone:

1. Give the family a reason to continue the family business
2. Develop a management team
3. Structure a business succession plan
4. Fund the business succession plan
5. Wealth replacement for other family members
6. Have a successful business

So what is right for you, your family and your business? I recommend reading the original article and then consulting with your team of professional advisors. Your attorney, accountant, financial planner and insurance agent will each bring a valuable and unique skill set to the table.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.

Reference: Forbes (February 3, 2014) “Six Steps For Making Your Business A Family Legacy”

 

 

Selling Your Business In Overland Park, KS - Employee Stock Option Plan

  For [] business owners that have also established their business as a corporation (not an option for partnerships), an Employee Stock Ownership Plan (or ESOP) may provide a better retirement option.

How you go about selling your business is completely up to you.  And for most, that moment is bittersweet. Bitter because you may say goodbye to the business forever.  Or bitter because you may sell yourself as an “employee” to the company you no longer own for those last years leading up to retirement. So where's the sweet part?

Alternatively, an ESOP may be an interesting option to consider to sweeten up that bittersweet decision. Curious? Take a look at a recent article in Forbes titled “How ESOPs Let Employees Take Stock In Your Retirement.”

The first question for the uninitiated (quite forgivably) is what is an ESOP? An ESOP, or “Employee Stock Option Plan,” is technically a retirement plan. However, unlike most retirement plans an ESOP effectively works to balance the retirement of the owner and the employees by balancing ownership and control.

Here is how it works: The owner essentially sells the stock of the corporation to the employees, but retains much of the corporate structure to control and run the business. In the meantime, the stock itself becomes the retirement plan for the employees who are now working to build the business that is their retirement.

Now, clearly there are some important moving pieces to consider regarding whether your business is suitable for an ESOP. When an ESOP is right, it can be a hole-in-one for all concerned. Take a look at the original article for a review of some of those “moving parts” that can make an ESOP right for a business, or a business right for an ESOP.

If an ESOP sounds like a good fit for you and your business, then be sure to get competent counsel. This is not a do-it-yourself project.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.

Reference: Forbes (December 27, 2013) “How ESOPs Let Employees Take Stock In Your Retirement”

 

Four Business Succession Questions In Overland Park, KS To Ask Yourself

While your goal might be to attract the most qualified buyer that will pay the asking price and lead the company on a path of continued success, it is what you expect of your life post-sale that should constitute how you execute the deal.

Done right, a business succession or sale requires the ability to ask the right questions, let alone have the right answers. And there is no shortage of good questions to ask of yourself, your company, your family, and of course, the potential buyer.

Fortunately, a recent article in The Business Journals titled “Key questions to ask when planning to sell your business” will give you a head start on the questions, but you must supply the answers.

While you can tailor the questions to fit your unique circumstances, here are the four questions the author of the article thinks you need to ponder:

1. Is seller financing feasible in accomplishing my future endeavors?
2. How involved do I really plan on being post-sale?
3. How should I mitigate the emotional connection to my business and my employees?
4. Should I sign that non-compete?

Obviously, these four questions are not all-inclusive. However, they are a good start.

In the end, the most prudent course of action may be to gather counsel from all of those who have a stake in what may be one of the most significant life event they and you may ever face. Consider soliciting the input of your loved ones, your leadership team, and your employees.  Then, once you have determined the best outcome for all concerned, meet with your professional advisors to help you get there.

Reference: The Business Journals (December 2, 2013) “Key questions to ask when planning to sell your business”

For more information on these Estate Planning issues in Overland Park, KS, please visit my website.

Passing The Torch In Overland Park, KS - Five Business Succession Tips

To ensure your exit goals are met and your family relationships remain intact, it's important to clarify the family succession process right from the start.

When you are a family business owner looking to pass the torch, the business is typically your greatest asset and likely the center of the family's wellbeing. You cannot afford to mess this up.

Succession planning is unique because business is business, and so a successful succession is a careful one.

There are a great number of moving pieces to your business and to your family. Nevertheless, there are some basic guiding principles to help tie it all together. A recent article in The Business Journals offers “5 tips for a successful family succession.”

While you should consult the original article for the details, here are the “five tips”:

1. Be Transparent
2. Clarify Ownership Values
3. Plan Ahead
4. Consider Financial and Tax Ramifications
5. Stay Connected

Essentially, respect the family as family and the business as business. Family is here to stay and everyone has to come out on top, while the business requires leadership, sharp decision-making, and a business mindset. It pays dividends to work with the family and maintain transparency regarding your plans to make the “handoff” and their plans to receive.

Ownership is a big issue to clarify, since ownership and a voice in the company straddles that fine line between merely family-owner and head-honcho decision-maker. These may be roles some loved ones are designed to occupy.

What are the issues that most directly affect you and your family? How can or will you work through them to pass on the business?

These are not simple questions by any stretch. More to the point, succession is more a process of working out the solution than just offering up the plan. You might say that succession is always a process unique to each family and family business, but one during which it is essential to have a steady hand guiding the process.

Reference: The Business Journals (December 9, 2013) “5 tips for a successful family succession”

For more information about Business Succession Planning in Overland Park, KS, please visit my website.

Prep Your Business Sale In Overland Park KS With These 10 Tips

An estimated 70% of businesses don’t have a family member capable or willing to assume responsibility. What are you doing to plan for the sale?

A certain reality will eventually set in when it comes to the future of your business.  And that reality is that some day you are not going to be there to run it. It is just a matter of time, and there may simply be no family member there to step up to the task, which is something even further from your control. For many a business, and for the betterment of the family, this means a sale. So what are you doing to prepare the business for sale?

It is, indeed, a hard math, and not something that comes easy to most of us. Nor does selling the business you worked so hard to create. Nevertheless, when so much of the family wealth is locked into the business, be sure to consider proven, practical tips for preparing it for a sale.

To get you started, consider a recent Forbes article titled “10 Simple Tips To Make Your Business Acquirable.”

The problem shared by most sales is that a business is only valuable if it is “acquirable.”  The 10 tips largely speak for themselves, but you will want to read the description of each in the original article.

Here they are:

1. Check Your Ego
2. Be Irrelevant [aka, do not personally be the “value” to the business]
3. Become Known
4. Develop Great Systems
5. Clean Up the Financials
6. Make a Profit
7. Develop Reasonable Expectations
8. Focus on Continuity
9. Be Transparent
10. Maintain Perspective

Remember: selling the business is crucial to your own retirement and the future of your family. Approach the process realistically and early.

Reference: Forbes (November 13, 2013) “10 Simple Tips To Make Your Business Acquirable”

For more information on a Business Sale and the potential effects on your estate, please visit my website.

Your Business Exit: By Design Or By Default In Overland Park, KS?

What will be the most likely exit scenario from your business when the time comes?

If you own a small business, what will your last day at work be like? What is your exit strategy? The answer hinges on whether your exit will be by design or by default.

To exit your business by design requires coordinating your personal estate with the estate of the business. Oftentimes the two are intertwined. Ask yourself the question recently posed in the title of a recent Forbes article: “How Will You Leave Your Small Business The Last Time?”

Will you sell it? Apparently as many as a third of business owners surveyed by the author planned to do so. However, the business brokerage industry reports a successful sales record of not much more than 20%.

Going to pass it on to the next generation? Some 14% of survey respondents said they were, but only roughly 30% of family businesses actually continue to the next generation.

In either case, the numbers simply do not add up well for casual business exit planning.

Just as you have worked hard to build your business, it seems you will need to work hard to successfully leave it. Accordingly, plan now for that last day or risk losing your investment by default.

Reference: Forbes (November 4, 2013) “How Will You Leave Your Small Business The Last Time?”

For more information on  Structuring a Business Exit in Overland Park, KS, please visit my website.

Sudden Wealth Needs Protection In Overland Park, KS

Sudden wealth can be a life-changing experience that can improve your life and the lives of those around you, but only if you keep it. Those with more assets are bigger targets for lawsuits. Don’t let your sudden wealth suddenly get stripped from you. Protect your assets before you get the windfall and you will sleep a little easier knowing your assets are better shielded.

If you have come into a sudden amount of wealth – whether by windfall, asset sale, or inheritance, etc. – then now is also the time for some immediate asset protection planning.

Structuring your ownership and protection of those assets is an important step you cannot afford to overlook. However, such structuring and protecting can get complicated. Much of what you can do (and cannot do) hinges on the very nature of the assets and the risks themselves.

Thankfully, there are some common strategies worth exploring. Forbes recently offered six proven asset protection strategies to shield both you and your important assets.

The article, titled “6 Asset Protection Strategies To Shield Your Wealth,” is worth a read.

If you are pressed for time, here is a capsule summary:

1. Increase liability insurance: insurance is a product to solve risk, after all, and liabilities are exactly the kind of lightning rod to be struck.
2. Separate assets: shared assets, with a spouse or family members, means doubling the risk on those assets, so separating them into your own accounts (or entirely out of your estate and control) can shield them.
3. Consider a business structure: the business exists as an entity that is not “you” and its liabilities are not your liabilities, so owning special assets (like rental properties) through an LLC or corporation will work to shield you and your individual assets.

Reference: Forbes (October 9, 2013) “6 Asset Protection Strategies To Shield Your Wealth”

For more information on Estate Planning Issues in Overland Park, KS, please visit my website.

Capitalize On Your Business Sale In Overland Park, KS

There are three main strategies business owners can (and should) use in order to maximize the amount of money they put in their pockets when they sell their companies.

Your business is your livelihood. It may also be your family's source of revenue. So if you are planning to sell the business, you will want to make the most of your sale ... not only for your future, but for your family's future too.

Since the business is such an integral part of your personal wealth, and perhaps also of your family wealth, planning time is time well invested. Thinking about, planning for, and knowing when to pull the trigger on the sale is just good life-planning. It can be tricky, too.

Forbes gave a few tidbits of wisdom on the topic of maximizing your business sale and the ensuing wealth in a recent article titled “How Business Owners Maximize Personal Wealth Selling Their Companies.” The article provides three steps worthy of consideration.

Essentially, you must plan to put the business in the right place to be bought, plan to put the family and yourself in the right place to sell, and plan to come to the negotiation table ready to get what you need.

Because your business, your family and your life goals are unique, be sure you “measure twice (at least) and cut once” when it comes to this major event.

There are no mulligans you can use once the ink is dry and the money has changed hands regarding your business sale.

Reference: Forbes (October 1, 2013) “How Business Owners Maximize Personal Wealth Selling Their Companies”

For more information about Business Sale and Business Succession of a Family Business in Overland Park, KS, please visit my website.