Ownership Transition

Ownership Transition is a process involving one or more strategies that allow business owners to achieve their personal and financial objectives.

Over the years we have achieved remarkable success assisting owners through the process using our Ownership Transition Analysis.  This proprietary program is designed to identify, evaluate, recommend and implement the planning strategies that will allow business owners and their families to achieve their objectives.

The framework for the Ownership Transition Analysis depends on the answers to such questions as: 
  • Who will ownership be transferred to? 
  • How much of the ownership will be transferred?
  • When will the transfer take place?
  • How much of the owner’s personal wealth does the company represent?

The first step in the analysis is identifying the planning strategies that are appropriate to our client’s situation and objectives. Then we determine the value of the company and incorporate that value into each of the strategies to project the financial and tax impact of each of the strategies. This insures that our analysis is based on actual numbers instead of vague hypotheticals. Our analysis is documented in a comprehensive report and we meet with our clients to present the results of our analysis and recommend a plan of action. With this approach, our clients have the assurance that all appropriate planning strategies have been considered. They have the information they need to make informed decisions. And they can relax, knowing they have set in motion a plan that will achieve their personal and financial objectives.

Family Business Succession

Transferring a family business involves far more than just financial and tax considerations. It involves sensitive personal issues and expectations that often differ from one generation to the other. We understand these issues and provide the independent third-party point of view that moves the transaction to a successful conclusion.We recognize the importance of defining the personal and financial objectives of both generations and we take the time to assist our clients in this critical step of the process. From this perspective, we develop realistic strategies that achieve those objectives and communicate them to our clients in a clear, non-technical format.Our approach ensures that all parties to the transaction have a clear understanding of the available options and the financial and tax implications of the transaction. The end result is a succession plan that provides retirement funding and estate planning options for the older generation as well as an affordable method for the younger generation to acquire ownership of the business.

Family Wealth Transfers

Family Limited Partnerships (FLP) and Limited Liability Companies (LLC) are effective strategies for transferring wealth from one generation to the next. Properly structured, these strategies allow parents to gift ownership of assets to family members at discounted values, while retaining control of those assets.We render valuation opinions in a broad spectrum of FLP and LLC transactions involving the transfer of closely held stock, real estate and marketable securities. In each case, our valuation discounts are developed after exhaustive research of market data, empirical studies, legal precedent and IRS guidelines to protect the integrity of the transaction.

Our approach ensures that all parties to the transaction have a clear understanding of the available options and the financial and tax implications of the transaction. The end result is a succession plan that provides retirement funding and estate planning options for the older generation as well as an affordable method for the younger generation to acquire ownership of the business.

Representative Engagements

Successful business owners face unique challenges in structuring an ownership transition plan.  With a broad range of strategies to choose from, our clients know they can rely on the specialized knowledge of our team of experts to determine the alternatives and recommend the strategies that will help them achieve their objectives.  The following situations illustrate engagements in which we provided the solutions for clients to implement their ownership transition strategies.

$3 million software company with a majority shareholder and three minority shareholders.

Objectives:

  • Structure a transaction to buy out two of the minority shareholders who were retiring.
  • Increase the ownership interest held by the majority shareholder's son who was active in the company.
  • Set up an incentive program for certain non-family key employees.
$10 million engineering company with a sole stockholder who wanted to maintain a majority ownership interest. The company had recently lost two key employees to a competitor that had an Employee Stock Ownership Plan (ESOP).

Objectives:

  • Determine if the company was a candidate for an ESOP.
  • Develop transaction structures assuming the stockholder sold up to 49 percent of his stock to an ESOP.
  • Obtain financing for the transaction.
  • Structure a gifting program to transfer some of the sale proceeds to his children who were not active in the company.

$20 million manufacturer of industrial products with a sole stockholder who was ready to retire.

Objectives:

  • Evaluate the merits of structuring a management buyout versus an outright sale to a third party.
  • Project the impact on profits and cash flow of a management buyout.
  • Conduct a search for potential buyers and solicit preliminary expressions of interest.
  • Meet with potential buyers and negotiate transaction terms.