Ownership Succession: Ensuring Your Company's Longevity

The company you’ve built with your blood, sweat and tears can continue to live on long after you’re gone — if you plan for it. We’ll help you get started.

No one lives forever. But the company you’ve built with your blood, sweat and tears can continue to live on long after you’re gone — if you plan for it. And if you’re one of the many owners who don’t have a formal succession plan in place, there’s no time like the present to start laying the foundation for your company’s future.

Unexpected events, such as death, disability or sudden financial hardship, can happen anytime. Having a succession plan gives your heirs and business partners a roadmap to follow if you’re not there or can no longer provide personal guidance.

Establishing a succession plan, however, won’t happen overnight. It can take months to put a formal plan in place. And experts advise completing the task 10 to 15 years before your intended exit to give yourself time to train a potential successor or gradually hand over the reins.

Envisioning Your Company’s Future

Do you dream of handing over your business to your children or finding a buyer so you can sail off into retirement? Your succession plan is as unique as your business, and it starts with establishing objectives and goals that will guide you through the process.

Some important questions to consider:

  • Have you identified someone in your company or family who could run your business?
  • Do you want to retain some control of the business after your departure?
  • Do you know how much your company is currently worth?
  • When do you foresee stepping aside?
  • How can you balance the future success of the company with your own retirement?

Build a Team, Pick a Strategy

Once you know where you want to go, you can put strategies in place to help you get there. And to help you navigate that process, you’ll want a team of experienced, qualified advisors, including lawyers, accountants, and investment and insurance professionals. The tax consequences alone can be daunting, so make sure your team includes someone who understands federal estate tax laws, tax exemptions, exclusions and deductions as they relate to succession planning.

As for wealth-transfer strategies themselves, here are three common tracks to consider:

  • Selling — Purchasers must use after-tax dollars to purchase the business. As the seller, you must pay capital gains tax. An installment sale or private annuity can provide a steady stream of cash flow to the company owner during the transition.
  • Gifting the business to a child or spouse — Gifts of $13,000 per year per recipient can be made without tax consequences, allowing you to gradually transfer ownership over time.
  • Gifting the business to charity — A charitable remainder trust is a tax-favorable option that creates a permanent legacy while still allowing you to transfer the business to family members.
  • ESOPs — Employee stock ownership plans (ESOPs) are tax-advantaged profit-sharing plans that allow employees to purchase a minority interest in the company, helping you to control the timing of your departure.

A Plan Is Just the Beginning

Once you have a solid succession plan, don’t let it gather dust. Business changes, and so does life — so revisit your plan periodically to ensure it’s keeping up.

And remember that you can count on your dedicated Relationship Manager to help with customized solutions and exceptional service. Request a consultation or visit your local branch to start planning for your — and your company’s — future today.


  1. “4 Tips for Small-biz Owners Who've Shelved Succession Plans,” by Anna Robaton, CNBC, posted Sept. 5, 2014, http://www.cnbc.com/id/101872084, accessed Oct. 23, 2014
  2. “Developing a Succession Plan,” SCORE, posted Jan. 3, 2012, https://www.score.org/resources/developing-succession-plan, accessed Oct. 23, 2014
  3. “Getting Out,” U.S. Small Business Administration, http://www.sba.gov/content/plan-your-exit, accessed Oct. 23, 2014
  4. “Smart Succession-Planning Strategies,” by Richard Rojeck, Entrepreneur, March 8, 2006, http://www.entrepreneur.com/article/83806, accessed Oct. 23, 2014
  5. “Tax Tips: ESOPs Can Be Part of Succession Strategy,” by Carl Grassi, Crain’s Cleveland Business, posted April 13, 2014, http://www.crainscleveland.com/article/20140413/SUB1/304139982/tax-tips-esops-can-be-part-of-succession-strategy, accessed Oct. 23, 2014
  6. “Could Your Business Survive Without You,” by Joanna L. Krotz, Entrepreneur, February 15, 2012, http://www.entrepreneur.com/article/222753, accessed Nov. 1, 2014

The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.