Blog

Every business should have a succession plan, and preferably, from the time the entity is formed.  A plan ensures the business will remain profitable during a transfer of ownership due to death, disability, retirement or another “Event” that affects one or more Exiting Owners.    

During an “Event”,  ownership  can pass (a) to a member of the Exiting Owner’s family, (b) the other owner(s), or one or more employees.  The Shareholders’ Agreement (for a corporation), an Operating Agreement (for an LLC),  or a Partnership Agreement (for a partnership) should clearly state the plan.

Every succession plan is unique, but some considerations are universal.

Will the buy/sell arrangement be structured as a “cross-purchase” or a “redemption “?

Cross-purchase arrangements allow the remaining owners the first option to purchase the Exiting Owner’s  interest.  A redemption grants the option to the business.

In a family business, must the deceased Exiting Owner’s ownership interest be sold or can the beneficiaries retain and receive ownership interest as part of the distribution of the estate?

Either way, the heirs may want immediate payment for their inheritance. A purchaser may want to pay over time.  The plan can stipulate the procedure.

Will the lives of the owners be insured in order to fund or partially-fund the transfer of ownership? 

Taking out “key man” life insurance can defray necessary out-of-pocket costs in the face of an Event.

Can an owner sell/transfer his/her shares to an outside third party?

The plan may give the first option to purchase the Existing Owner’s interest to the remaining owners or the business before allowing sale or transfer to an outside party.

If an owner disassociates from the business, either voluntarily or involuntarily, will that owner be able to “compete” with the business?

“Competition”, the duration of any restriction, and the restricted geographic area must all be defined. Any trade secrets must be protected with a non-disclosure provision.

Our detailed, succession planning questionnaire addresses these and many other issues.  Having a succession plan in place today can ensure a smooth transition of ownership in any unexpected situation, and potentially save thousands dollars in legal fees and court battles.

Keith A. Zerman is a licensed attorney at Gardi, Haught, Fischer & Bhosale LTD Ltd. in Schaumburg who specializes in estate planning. Contact him at 847-944-9400.

Client Testimonials

Эрлан Токолов

Профессионалы своего дела!

Kevin Wesling

I just wanted to share that I had an excellent experience with Gardi, Haught, Fischer, & Bhosale and more specifically Thomas Haught. Everything went great and I am even more convinced that one does not need a real estate agent to buy a house when you have a good lawyer!

Mahmoud Faisal Elkhatib

Our team partnered with Gardi, Haught, Fischer, & Bhosale LTD. on a recent transaction, and we appreciated their dedication and professional approach to closing the deal. We’re looking forward to more successful collaborations ahead

Jimmy Su

We just had great experience with Tom Haught and his paralegal Courtney Kropf. The communication is clear and fast. All emails were replied within 30 minutes. We will definitely work with Tom Haught again.

Sagar Kanabar

Jeannette Gonzales

Was recommended to them from my company. They did an excellent job and always answered all my questions. Were always upfront with all things and made sure I understood everything that was explained to me.

Ardus

We used the law firm during the sale of our house. We dealt with Mr Haught and Courtney, who made the process very smooth. They were professional, yet very friendly to deal with.I would not hesitate to recommend them to my family and friends.

vanissa colaco

Our immigration experience with Ann Fischer has been amazing! She has been meticulous, organized and worked on our case in a timely manner. Ann and her team went above and beyond to address all of our concerns and provide a personalized support which made a significant difference during our stressful time.I highly recommend her services to anyone seeking legal representation for their immigration matters.

Mike and Keeley Aulert

We have used Tom Haught for two home purchases and one sale over the years and continue to be impressed by his professionalism, responsiveness, and thoroughness. Reasonable pricing too. Highly, highly recommended.

Waseem Chaudhry

Gardi, Haught is one of professional firm, I have been with G&H since last 8 years in all legal matters.RegardsWaseem Chaudhry

Request a Consultation

First Name*(Required)

Last Name(Required)

Email Address*(Required)

Phone Number *(Required)

How can we help you *(Required)

How did you hear about us? *(Required)

29107