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The failure rate for privately held businesses is phenomenally
high. According to the National Federation of Independent
Businesses, only about 50 percent of small businesses make
it through the first five years. According to the Small
Business Administration, only about 30 percent of family-owned
businesses survive to the next generation, and only half
of those that make it to the second generation make it
to the third generation.
“Who do you envision running the business when you are no longer willing
or able to do so?” Follow this question with, “Do you want to
be in business with your ex-wife? Your co-owner's adult children? The new husband
of your daughter?” Without adequate succession planning, any of these
scenarios is a very real possibility.
Key planning elements
Succession strategies include a number of things. The main
ones are:
- A shareholder/partnership agreement and/or
- A buy-sell agreement
- A means to fund the agreement(s)
For more resources on succession/exit strategies, please
visit the following links:
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