Legal counsel specializing in business and estate planning. Options for Succession Transfer of ownership of business to family member Advantages Permits the perpetuation of ownership in the family, thus giving sense of security and comfort to employees and customers. May serve as a part of an overall estate plan for owner by permitting the periodic transfer of stock, which decreases the impact of estate and gift taxes. Disadvantages Plan is dependent upon the business abilities of the owner's family member to operate in the absence of the owner. It is unlikely that retiring owner will be relieved of obligations under company debt until the financial statement of the next generation of family members is as strong or stronger than that of the selling family member.
Advantages Ensures continuity of management and operations.
Can be a major incentive for keeping key employees in the company when tempted by competitors to leave. Disadvantages Key employee buyouts rarely are funded with cash from employees or bank financed. Usually the sale is on an installment basis. Personal energy and time and professional expenses are incurred in putting together a plan to avoid disgruntled employees receiving a lower ownership percentage than they desire, or becoming disappointed and leaving. Removal of seller from company debt is unlikely unless employees have strong financial statements.