Category Archives: Shareholder Agreements

Succession Planning: Surviving the Second Generation

Asset Protection, Estate Planning, Inter-Generational, Shareholder Agreements, Succession • Tags: , ,

Succession Planning: Surviving the Second Generation

Business Journal
by Nancy F. Blumberg, CPA
Simon Master & Sidlow, P.A.

As founder and CEO of a prosperous small business you undoubtedly have a keen interest in ensuring its continued viability upon your retirement, disability or death.However, more the 50% of family businesses do not survive beyond the second generation.Consequently, it is important for you to formulate a succession plan that will keep the business going and ensure the security of your heirs.Even if your withdrawal from active involvement in the business is not in the immediate future, formulating a tentative succession plan now is smart business.

If you have younger family members who have both a desire and the necessary expertise to operate the business in your absence, there are several options open to you.The tax law encourages you to begin giving (“gifting”) common stock in the business to family members as soon as possible.The annual exclusion can result in all estate and gift tax liability being eliminated on transfers of up to $10,000 worth of stock each year to each donee ($20,000 per donee if you are married and gift-splitting is elected).If your business is not already incorporated, you can incorporate it tax-free in order to implement the gift program. More…

The Key to Long-Term Shareholder Value, Part I

Boards of Directors, Communication, Compensation Policy, Ownership Transfer, Shareholder Agreements • Tags: , , , , ,

The Key to Long-Term Shareholder Value, Part IBaylor

Legacies Newsletter
by Donald J. Jonovic, Ph.D.

Owners of closely held companies, by experience, inclination, necessity, and, often, personality, tend to focus on the short term. Most available waking hours are absorbed by immediate problems, sudden opportunities, annual profits and cash flows. Fortunately, a successful business can, in fact, be built this way. It happens every day.

Unfortunately, this focus on immediate challenges and rewards is definitely not the way to build the shareholder value of that successful business for the long-term.

Consider how this outlook affects transition. Few would doubt that a smooth ownership and management transition in a family firm can enhance the value of that firm to shareholders and potential buyers. Even so, in companies with a short-term focus, transition (when it’s thought about at all) is seen as an “event” in some distant future: “We’ll get to it when the problem arises.” This is wrong. Companies don’t suddenly decide to have a transition any more than a woman suddenly decides to give birth. Transition is a process. It is a way of going about things. More…