Business Succession Planning: The Uncomfortable Subject Partners prefer to Avoid.

Its not just about whether your kids will take over the keys to your business in some distant future - its about real possibilities that can happen in a far more nearer term as you may think.

If you run your own business, chances are you operate it under a partnership or an LLC. Me too, by the way. I vaguely remember the formalities I followed when I started my firm, like filing Articles of Incorporation with the Florida Department of State and getting an EIN with the IRS. That was about it. Then I quickly plunged into the trials and tribulations of starting a law practice such as opening bank accounts and credit cards, networking, setting up my office, putting my accounting in order and a host of other top priority issues. As owner of my own business, little time I have left to think about even more formalities like succession planning - after all I run a solo practice. But guess what, if you run a business with other partners, succession planning is neither a formality, nor something you want to ignore or postpone.

Business succession often elicits events that may happen decades from now, hence the lack of urgency it often gets. Not so, though. Planning for business succession protects the business and its partners against real and potentially immediate events that, if unprepared, can drive your business to the ground. Here are a few possible scenarios:

• Disability of one of the partners for an extended period of time. Without a plan, patience from the other partners will eventually wear out while waiting for full recovery. This is especially so when the disabled partner has a critical role in the business.

• Divorce of one of the partners, forcing his interest in the partnership to be shared with the ex-spouse. You suddenly have a new partner, whether you like it or not.

• A lawsuit against one of the partners, where plaintiff is able to pierce through your corporate veil for lack of proper structure, forcing the sale of assets to satisfy the judgment.

• Death of a partner, whose daughter inherits his share of interest in the partnership. Knowing very little about the business, she wants to take it in a dramatically different direction.

• Retirement of one of the partners - not necessarily because of old age. It could be just loss of interest in the venture, or landed a very well paid job, or inherited good money or won the lottery. What will his exit strategy look like?

Preparing your business to successfully cope with these and many more very real eventualities enhances the value of the enterprise, brings stability to the operations and prevents potentially devastating discord among partners. How do you go about doing it? With a business succession planning: a suite of well designed documents that include an operating agreement and a buy sell agreement. If you want to learn more about business succession planning, call us at 305-924-2918 or email us at dcoriat@strategic-a.com.