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Overview of business succession planning

While it might be easy for a small business owner in Virginia to think that she has arrived after forming her business and taking the first steps in organizing it for the long haul, there will always be a need for ongoing business planning.

For a family-owned business or other closely held enterprise, for instance, business succession planning is important. Without a proper plan, the transition to new leadership once the original owner retires or can no longer run the business can be rockier than it should be.

In the worst case scenario, a transition can fail altogether, which means the business may have to close unexpectedly. Litigation is also a real possibility.

Some of a successful business succession plan may also require proper estate planning on the part of the owner, but much of it also happens at the level of the enterprise.

For instance, if the business is incorporated, part of an LLC or even just an unincorporated partnership, there may need to be contracts and other documents that describe how ownership of the business is supposed to change hands.

If a business is a sole proprietorship, the owner will want to identify his potential successors early and develop a legal plan for handing over the reins of the business. This may require a buy-sell agreement or, if the business will be gifted, a proper plan that will minimize tax consequences.

Likewise, the legal and business consequences of what will happen when the next generation takes over need to be thought out and incorporated in to the daily affairs and culture of the business.

Particularly in a small business in the Blacksburg area, succession planning is just part and parcel of the business formation and planning process. Getting the help of an experienced attorney may better assure that the process goes as expected.