At GALLINA, we work with businesses of all sizes to help assure owners that what they’ve worked for will remain a lasting achievement for those who follow.

Here are four reasons why a business succession plan is important:

Business Continuation: Company owners not only want to build a legacy for the next generation, but may also feel an obligation to continue to provide jobs for loyal employees.

Employee Retention: Key employees will be motivated to remain with the company subsequent to the owner’s retirement if they feel they have a genuine financial stake in the company’s future.

Retirement Planning: Retiring owners can use the plan as an income source during retirement.

Estate Planning: Owners may also design the plan to complement their overall estate planning desires, including the equal distribution of assets to children.

Business Succession Planning is a process and the ownership transition requires:
     Identifying prospective family members and/or key employees for ownership
     Determining the transition’s financial requirements
     Identifying funding sources
     Recognizing and mitigating transfer tax liabilities

Planning the Process- Retiring owners must identify key family members and/or key employees with these attributes:
     Appropriate educational background
     Required technical skills
     Ability to market the company’s products and services
     Ability to command the respect of fellow employees
     Ability to manage and motivate lower level managers and employees

Controlling the Transfer Methods -The most frequent ways to transfer ownership include:
     Implementing a lifetime gifting program
     Redeeming the stock by the company
     Implementing buy/sell agreements
     Outright selling of stock to existing owners or newly identified owners
     Selling the assets of the company
     Selling stock to an employee stock ownership plan (ESOP)
     Utilizing spin-offs and split-offs of divisional components

Financing the Transaction - Both internal and external sources of capital may be used to fund an ownership transition plan:

Internal sources include:
      The company’s retained earnings
      Current operating profits
      Income bonuses to those acquiring stock
      Seller financing
      Buyer financing

External sources include:
     Life and/or disability insurance pursuant to the terms of a buy/sell agreement
     Third-party debt
     Accessing public and private capital markets