Mandelbaum Barrett PC’s Post

View organization page for Mandelbaum Barrett PC, graphic

Mandelbaum Barrett PC

3,466 followers

2mo

How do you pass on a business fairly to your children when they all have different degrees of involvement in the company? According to PwC nearly 70% of family-owned businesses in the U.S. struggle with succession planning, facing the challenge of balancing fairness and business continuity. Linda’s story is just one example of many families navigating this complex process. Shawn McClelland looks into Linda’s story in our latest LEGACY LESSON episode and expands on how to structure a successful business transition. #BusinessSuccession #EstatePlanning #FamilyBusiness #LegacyPlanning

Transcript

Linda, a 72 year old owner of a thriving business, is contemplating retirement. Over the years her business has grown significantly, becoming a well respected player in the local economy, known for its high quality products and innovative processes. Lynn has two children, however only one of them is in the business. The other has provided some information and helped with the business but doesn't is and is not involved in the day-to-day operations. Faced with the challenge of planning her retirement, Lindas seeking advice on how to structure the transition of her business. She aims to ensure her own financial security, treat both children equitably and maintain the company's prosperity and staff morale. How can Linda structure the transition of ownership to support her retirement financially, acknowledge each child's contribution and interest fairly, and ensure the business is an ongoing success? This happens a lot, right? There are a lot of people will call them small businesses, but they're not small to the actual business owners. They're an important part of who they are, their net worth and their estate planning. It's usually a very large part. So when they have more than one child, given the entirety of the business to one child rather than the other, is usually not equitable and Linda would like to keep it as equitable as possible. How this is approached as a matter of facts, right? What kind of business is it? Alright, when I say what kind of business? Is it a corporation? Is it an LLC? Is it a partnership? Is it a sole proprietorship? All of those things in the answers to those questions are very important. If it's a corporation, is it a C corporation or is an S corporation? All of these entities have their own benefits, but they also have their own distractions. So you have to 1st establish what the business is and how it's structured. Based upon that structure, you can determine compensation. It's easy to give the equity or the ownership interest in the entity to both. Of her children, however, we've got one in the business who is growing it and making it prosperous. They likely, in order to continue with the operation of the business, will want to be compensated for their efforts more so than what their sibling may receive. Depending on the structure of the company, you can accommodate that request. Clients will often ask is this fair, OK, and what kind of plan they've developed? Well, the only person that matters, whether or not it's fair or not, is the person developing the plan. In this case, it's Linda. Does Linda think it's fair what she's planning to do? Knowing that maybe her kids may not see it as fair at that point in time. The other thing I would encourage clients to do is actually talk to their kids about their plan and what they want to do, right? Get an idea about what their children see as it being fair or what they desire as part of the business. Because we're talking about a transition potentially during Wendy's lifetime, right? That also continues to fund Linda's lifestyle. So if you're working in a business and you intend to eventually own that business. But a portion of your income generated by the business is still going to pay out Mom. There's a difference in the economics of those situations. There are many different ways to fund moms retirement. You could still keep her on as an employee. You could set up a type of deferred compensation plan. You could fund retirement plan plans. You can structure a buy out using the cash flow of the company that will pay mom out over time. All of these potential things are fact based approaches. It matters very much the structure of the the business, how it operates, what its cash flows are and what the clients intent is at the end of the day.

To view or add a comment, sign in

More Relevant Posts

Knox McLaughlin Gornall & Sennett, P.C.

1,542 followers
4mo Edited
Report this post
Thomas C. Hoffman, II discusses the importance of business succession planning, including thinking about potential UNplanned events. What would happen to YOUR business if you did not show up on Monday morning? Does your business have an appropriate plan in place? Learn more about planning for that immediate, short-term contingency, as well as a longer term traditional exit plan: https://lnkd.in/e4hp-5ae Our business succession practice: https://lnkd.in/e63fixk9 #businesssuccession #planahead #successionplanning #whatif
Like Comment
To view or add a comment, sign in
John Piotrowski, CFP®,APMA®,CRPC®

President & CEO, Managing Partner-Leeward Financial Group, Financial Advisor
4mo
Report this post
Succession planning is crucial for helping to ensure the long-term success and continuity of your business. At Leeward Financial Group, we guide you through every step of this essential process to protect your legacy and help confirm a seamless transition. Planning for the future is critical to the success of your business, Let Leeward Financial Group guide you through every step of the succession process to help guarantee your legacy endures. #LeewardFinancialGroup #WealthManagement #LighthousePoint #Florida #RaymondJames #SuccessionPlanning #LeadershipDevelopment #BusinessContinuity #LegacyPlanning
Like Comment
To view or add a comment, sign in
Tara M.

Chief Executive Officer at Knox McLaughlin Gornall & Sennett, P.C.
4mo
Report this post
Planning for the future is crucial for any business. Here’s why Business Succession Planning matters: 🔑 Continuity: Ensures smooth operations during leadership changes. 🚀 Growth: Grooms future leaders for sustained success. 📈 Financial Security: Protects the financial interests of the business. 👥 Employee Morale: Boosts morale by showing commitment to long-term success. 🛡️ Risk Management: Prepares your business for unexpected events. Future-proof your business by contacting us to start your succession planning today! #BusinessSuccess #SuccessionPlanning #Leadership #FutureProof #BusinessGrowth #RiskManagement
Knox McLaughlin Gornall & Sennett, P.C.

1,542 followers
4mo Edited

Thomas C. Hoffman, II discusses the importance of business succession planning, including thinking about potential UNplanned events. What would happen to YOUR business if you did not show up on Monday morning? Does your business have an appropriate plan in place? Learn more about planning for that immediate, short-term contingency, as well as a longer term traditional exit plan: https://lnkd.in/e4hp-5ae Our business succession practice: https://lnkd.in/e63fixk9 #businesssuccession #planahead #successionplanning #whatif
Like Comment
To view or add a comment, sign in
Dominium Capital Group

90 followers
9mo
Report this post
Succession... The risk is real. Even (especially) in Small Business. Succession planning and Key Person risk are issues we discuss with our entrepreneur business clients all the time. However, sometimes, small business owners don't consider this risk seriously. But, to illustrate just how real the risk can be, I read a research analyst report this week, of a well known business, which stated: "Key-person risk, succession planning, and team stability issues give us pause, and see our view of the team fall a notch." I am deliberately not naming names here, of course, because the point is that even well known companies and businesses can be prone to the risks presented by not having a clear, well-articulated, succession plan in place. So, why would small business owners think they are any different, or less prone to this risk? Indeed, the risk is likely to be higher. Having a succession discussion in your business - no matter how "small" - is never a waste of your time or energy and you might be surprised at the ideas you generate for your long term goals. #SmallBusinessSuccess #SuccessionPlanning #BusinessLegacy #FamilyBusiness #FounderSuccess #businessstrategy #SuccessionSuccess
Like Comment
To view or add a comment, sign in
I.M. Financial, LLC

191 followers
1mo
Report this post
70% of businesses fail to have a succession plan in place. Don't let your business be one of them. Our new blog post discusses the importance of succession planning and how to create a seamless transition. https://lnkd.in/eqhUqKhg #businessownership #successionplanning
Like Comment
To view or add a comment, sign in
Thomas Kim, MBA, JD
3w Edited
Report this post
I’m excited to start sharing insights from my decades of experience in turnaround management and restructuring through a new series: Tom’s Turnaround Tips. Stay tuned for practical strategies, lessons learned, and tips for navigating challenging business situations! Tom's Turnaround Tips #1: #CashFlow #BusinessFinance #LiquidityManagement #FinancialPlanning #R13WCFP #OperationalEfficiency #BusinessStrategy #Tomsturnaroundtips
3 Comments
Like Comment
To view or add a comment, sign in
Parker Inabnet, CFP®

Senior Financial Advisor at Wells Fargo Advisors
1mo
Report this post
70% of businesses fail to have a succession plan in place. Don't let your business be one of them. Our new blog post discusses the importance of succession planning and how to create a seamless transition. https://lnkd.in/eT2wnbSv #businessownership #successionplanning
Like Comment
To view or add a comment, sign in
Casey Conklin

Attorney/Owner at The Law Office of Casey D. Conklin PLC
2mo
Report this post
Think business succession planning is just for large corporations? Think again! Small businesses can gain continuity and stability through proper exit planning. Don't leave your future to chance—secure your business's legacy today! #SmallBusiness #ExitPlanning #Business #success
Like Comment
To view or add a comment, sign in
DPH Financial Services

619 followers
8mo
Report this post
Have you envisioned the future of your business in your absence? Succession planning is not just a strategy; it's a safeguard for the longevity and stability of your enterprise. It's about ensuring that the legacy you've meticulously crafted and the well-being of your employees and customers remain protected and continue to flourish. Leaving your business's future to chance is a risk you shouldn't have to take. We can devise a seamless transition strategy that honors your hard work and vision. Contact us to book a consultation. Your legacy is invaluable—let's ensure it has a plan that reflects its worth. #BusinessSuccession #BusinessPlanning #SecureYourLegacy #DPHFinancial https://lnkd.in/gNbzxM9S
Like Comment
To view or add a comment, sign in
Thorntons Accountants & Business Advisors

246 followers
5mo
Report this post
Critical Success Factors in Family Business Succession Effective succession planning means proactive engagement and strategic foresight. From initiating the process early to maintaining momentum and implementing the plan, this article highlights key factors essential for safeguarding the legacy and prosperity of family-owned enterprises. Read the full article here - https://hubs.la/Q02yt7C60 #FamilyBusinessSuccession #SuccessionPlanningPitfalls #StrategicExecution
Like Comment
To view or add a comment, sign in

Mandelbaum Barrett PC

3,466 followers

View Profile Follow

More from this author

Explore topics

翻译：