When planning for a closely owned business there are many opportunities and challenges. There may be non-owner Key-Employee(s) who are important to the success of the company that may consider employment opportunities with other companies or competitors. There may be management personnel being developed for future company positions. The owner(s) of privately owned businesses are continually focused on the day to day operation of their company; these include marketing, finance, customer relations, and employee relations and may also include putting out fires in any one or all of these areas. The business in most respects has required investments of time, money and emotions that have taken the business owner(s) away from their family. The business for the most part is considered another child that must be nurtured and cared for by the owner(s). There comes a time when the owner(s) must consider what is going to happen to the business when they are no longer active in the company for any number of reasons and if it is efficient to have to business end or continue.

Business Succession Planning

  • Retirement
  • Disability
  • Death
  • Disillusion

Buy – Sell Planning

  • Partner/Shareowner to Partner/Shareowner
  • Entity – Cross Purchase
  • Owner to Employee
  • Family Succession

Business Continuation Planning

Re-charactering the business entity, each entity has different and distinct tax characteristics to be considered

  • Sole Proprietor
  • Partnership (General & Limited)
  • “C” Corporation
  • “S” Corporation
  • Limited Liability Companies

Additional considerations may include

  • Re-capitalization
  • Intra-Family Sale
  • Family Limited Partnership
  • ESOP’s
  • Sale to a inside management group
  • Sale through a business broker

Funding Methods

  • Personal Funds of Buyer
  • Sinking Fund in Business
  • Borrowed Funds
  • Installment Payments
  • Insurance

Business Valuation Guidelines

Key – Employer Fringe Benefits

  • Deferred Compensation
  • Executive Bonus Program (Section 162)
  • Split Dollar Life Insurance
  • Disability Income Insurance
  • Long Term Care Insurance
  • Employee Stock Purchase Plan








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