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A primary concern of business owners in all industries is the transfer of ownership or control of their business operations. Examples of such events are the company founder's death, disability, or retirement. Duba & Duba, PLLC’s closely held family business experience has provided our attorneys with particular expertise in scenarios where the original founding generation generally has a goal of long-term continuity or family ownership. Several transition options can be considered, including continuing the business in its current format, selling the business to a third party, or dissolving and liquidating the business. Succession planning requires extensive advanced planning by an owner and the coordination of a management and operations plan with the owner's personal estate plan. The succession plan often focuses on who or which family member retains control of the decision making, who is responsible for running the business on a daily basis, how compensation is decided, and who has the authority to hire or replace personnel. Estate planning goals often include funding with insurance, the minimization of taxes, equitable overall estate distribution to children, and an orderly ownership transition and strategic management implementation in the event of a disability, death, or retirement event.
Every business with more than one owner should have a contractual arrangement between the owners so that a deceased or retired owner will ideally have some certainty on a predetermined sale price for that owner's interest and so that a remaining or surviving owner will have similar certainty as to control of the business operations and who that surviving shareholder's future partner or co-owner may be. Duba & Duba has experience structuring business succession plans ranging from a basic format with life insurance funding a surviving shareholder purchase to sophisticated transfer plans that include option to purchase agreements, shareholder voting agreements, creation of voting and non-voting shares of stock, and various alternative valuation formula techniques. Documentation of these key business issues is a common task our firm recommends and regularly completes for its varied client base.