Why Family Businesses Should Have Succession Plans
Wausau WI Buska Retirement Solutions Businesses Succession Plans

The family drama surrounding an aging media mogul — and his unresolved succession plans — are at the center of a hit television show.

Intentions of Family Business Leaders

Wausau WI Buska Retirement Solutions Succession Plans Chart
Source: US Family Business Survey, PwC, 2019

 

In fact, only 18% of family businesses have a documented and communicated succession plan in place.1 Much like the fictional billionaire in “Succession,” some leaders avoid the issue because they love running their businesses and don’t want to stop any time soon.

But one never knows what the future has in store. Even if you are happy, healthy, and determined to stay involved in your business for years to come, you might be glad you took the time to develop a thoughtful succession plan.


Set a Target

It might be wise to have a realistic retirement date in mind. Any effort to identify and groom a successor might take longer than you expect. And if you plan to sell your company, it could take several years to find a qualified buyer, begin the ownership transition, and finalize the transaction. To get the best possible price and terms, you may need to focus on improving the company’s balance sheet before you put it on the market.


Stage Your Exit

Keeping your business in the family may be an easy decision if an adult child or another relative is capable, willing, and prepared to take over. If so, finding ways to reduce the value of the business on paper could help you gift ownership shares with fewer tax consequences.

Otherwise, it may be possible to sell your business to co-owners, outsiders, or even your own employees. Closing and liquidating the assets could be the only viable option for some businesses.


Invest for Retirement

Making annual retirement plan contributions with some of your profits can build wealth outside of your business and help insulate your personal financial picture from risks associated with your business’s distinct market. Building a separate investment portfolio might also provide greater flexibility during and after a transfer of ownership.


All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.

1) US Family Business Survey, PwC, 2019

Advisory services are offered through Buska Wealth Management, LLC, a Registered Investment Advisor in the state of Wisconsin. Insurance products and services are offered through Buska Retirement Solutions, Inc., an affiliated company. Buska Retirement Solutions, Inc. and Buska Wealth Management, LLC are not affiliated or endorsed by the Social Security Administration or any government agency. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The information contained herein is not an offer to sell or a solicitation of an offer to buy the securities, products or services mentioned, and no offers or sales will be made in jurisdictions in which the offer or sale of these securities, products or services is not qualified or otherwise exempt from regulation. The information contained in this material have been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.

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