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Succession Planning for Business Owners May 19, 2011 Ted A. Waggoner Peterson Waggoner & Perkins, LLP Law Firm.

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Presentation on theme: "Succession Planning for Business Owners May 19, 2011 Ted A. Waggoner Peterson Waggoner & Perkins, LLP Law Firm."— Presentation transcript:

1 Succession Planning for Business Owners May 19, 2011 Ted A. Waggoner Peterson Waggoner & Perkins, LLP Law Firm

2 Contact Info Ted A Waggoner Peterson Waggoner & Perkins, LLP 125 E. Tenth Street Rochester, IN 46975 574-223-4292 ted@peterson-waggoner.com www.peterson-waggoner.com © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 5/19/20112

3 What is Succession Planning? Planning to turn over the ownership or management to others. Leaving the business in the condition you want it to have. The best chance to create a peaceful transfer for family purposes. 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 3

4 Why Engage in Succession Planning? Family Needs – the basis of succession planning. Tax Minimization for you Business Continuation Facilitate Retirement for Owner Provide Leadership to Those Succeeding You © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 5/19/20114

5 Succession Planning Steps What steps do we take to develop a good Succession Plan – Family discussions Those involved in the business Those not involved in the business – Discussions with Financial Planners, Accountants, and Trusted Advisors – Make the decisions © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 5/19/20115

6 How do you do Succession Planning? Meet with your Attorney – Information you should have – Ideas you need to have considered Are you engaging the attorney early enough in the process where the education and experience can be of help? Do you have or need a team of planners? © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 5/19/20116

7 Doing Succession Planning Who are “the best planners?” – Usually a team approach works best for larger business operations, with serious tax concerns. – Business lawyers who are familiar with the issue and with the client’s business and employees. – Planners who know the family dynamics © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 5/19/20117

8 Making the Decision It is the goal of the process to make a decision Document the decision Discuss the decision with the people who carry out the decision Not necessary to discuss the matter with everyone – but include those most affected For those who will be disappointed, let them know, and that they need to deal with the decision. 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 8

9 Tools in Succession Planning Lots of tools can be used in Succession Planning: – Entity Structure – Outright Sales – Contracts to Sell – Estate Planning Documents – Gifts – Tax Laws © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 5/19/20119

10 What is the Most Critical Issue? Business Valuation Do you know what its worth is to sell? 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 10

11 How do we Sell a Business? One form of Succession Planning is to plan to sell the business to a competitor Another is to sell to one or more members of the family A third is to sell to members of the management team 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 11

12 What types of Sales can we use? Cash Sales Buy Sell Agreements Contract Sales 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 12

13 Other ways to transfer? Estate Planning Documents Gifts 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 13

14 Tax Laws Tax Laws in Succession Planning are complex – Many variables based on the entity – Variables based on the style of transfer Need to deal with those as the issues are addressed Family Limited Partnerships 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 14

15 Non-compete clause Three Reasonables in Non-Compete Clause – Reasonable in Scope – Reasonable in Time – Reasonable in Distance 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 15

16 Who should do your Planning? At Peterson Waggoner & Perkins, we suggest you hire the best planners you can find and can work with. 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 16

17 Reminder of Planners Those involved in the planning should include: – Attorney – Accountant – Business Valuation Expert – Human Resource director – Family members inside the business – Family members outside the business – Spouse 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 17

18 Further Questions? 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 18

19 Contact Info Ted A Waggoner Peterson Waggoner & Perkins, LLP 125 E. Tenth Street Rochester, IN 46975 574-223-4292 ted@peterson-waggoner.com www.peterson-waggoner.com © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 5/19/201119

20 Thank You Ted A. Waggoner – Peterson Waggoner & Perkins, LLP 125 East Tenth Street Rochester, IN 46975 PH: 574-223-4292 email: ted@peterson-waggoner.com 5/19/2011 © Ted A. Waggoner, Peterson Waggoner & Perkins, LLP 20


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