VanAntwerp Attorneys, LLP
Phone: 606-618-0698

Planning for business succession: what questions should you ask?

If you are a successful Kentucky business owner, you are fully aware of the reality that one day you will need to turn your business over to a capable successor. The U.S. Small Business Administration reminds entrepreneurs to plan ahead for that day rather than think of it as a one-time event. The SBA also offers guidance for exactly how to do that.

2018 owners of U.S. private businesses are on the cutting edge, the SBA reveals, citing statistics that say within 15 years, "the largest intergenerational transfer of wealth in U.S. history" will take place. Asking several questions regarding your business will help you prepare for a premium cut in the exchange. 

The first question to consider relates to your organization's financial status: is your company healthy? More specifically, is it profitable or are you weighed down in debt? Can you cut any areas of wasteful spending to ensure greater profit in the years ahead? The answers to these questions provide an accurate reading of the health of your business. The healthier the establishment is, according to the SBA, the easier it will be to sell. 

Another question to consider long before the succession will occur has to do with resources for a smooth transition: whom should you choose as your advisors? You will likely want a team of knowledgeable consultants rather than one or two individuals. The SBA recommends having those already partnered with you - your company's accountant, lawyer and banker - on board, in addition to a mentor who knows the ins and outs of the succession process. 

Lastly is a question you may have already considered: to whom will you sell? Are you planning to pass the business down to a son or daughter, or is your Vice President of Operations a potential buyer? Consider the individual's financial prowess as well as his or her business savvy when you are exploring the possibilities.

You may not know the answers to all of these questions right away, but the SBA suggests thinking ahead so the company you have worked so hard to build will not fall flat when the time comes to sell it.

Note this information only intends to educate regarding planning for business succession and should not be interpreted as legal advice. 

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