Succession Planning in Family-Owned and Non-Public Businesses and Business Divorce Preparation

Description

Most small business owners have no exit plan or strategy for continued operation once they step aside. For family-owned and privately-held business family dynamics, the nature of the business itself and the current ownership structure and manager all significantly affect the future operation and potential transfer.

Business counsel can play a crucial role as owners or senior management make the decisions and craft the operational and legal documents necessary to ensure a steady transition of power. In the best of circumstances, counsel will be able to create a viable exit strategy at startup. Failure to take into consideration at corporate inception could result in reputational damage to the attorney and firm, malpractice threats, or a report to the bar for ethical violations when disputes between the owners ultimately arise.

In the worst-case scenarios, succession planning and retirement of an owner can lead to a crisis. These "business divorces" can have significant legal and financial implications for owners. A well-constructed exit plan included in the organizational transactions and governing documents at startup can help lessen the economic impact when a business divorce occurs. The plan should address asset division, owner compensation, and competition restrictions, among other issues.

Listen as our panel of experts explains how to assist business owners in planning for a successful transfer of ownership and develop an exit strategy for their family business. They will cover the issues when exiting a business triggers the potential divorce of the owners and threatens the continued existence of the enterprise.