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Business Succession Strategies


Protect Your Business

For pennies on the dollar you can protect your investment, your employees, your clients and your smooth transition to retirement or possibly to your heirs. Creating a solid business succession plan will provide several benefits to owners, partners and employees. A well-laid plan can:

  • Establish a value or transfer price during the life of the owner(s)
  • The policy benefits will be payable immediately when needed to purchase the deceased’s share of the business without the strain to liquidate assets or require a loan.
  • Prevent a hostile takeover due to a fire sale from a would-be competitor.
  • Provides money to the heirs of the deceased owner when needed to properly settle estates.

Business succession planning is one of the most important steps a small to medium size business owner can take to protect their investment. Suitable planning requires sound preparation with a team of professionals. American Heritage Financial can help with Business Succession planning and has a team of competent, experienced advisors. We will work as a team with your CPA to properly secure a plan that works for you. All plans are customized, consistent with your way of thinking. To learn more, contact us today. There is no cost or obligation to meet with one of our representatives.

The Problem

Let’s make a few assumptions and see what happens to a local engineering firm where Julie Smith is the owner in small town America. At XYZ engineering, Julie takes on many of the firm’s vital tasks including payroll for its 12 employees and the important role of bidding of the new jobs. In many ways, Julie IS the business. To successfully navigate the competitive waters in business today, Julie knows a business must keep the competitive edge.

Unfortunately, after just 6 years in business, she has chronic illness or a condition that renders her unable to perform her job duties. Being such a new business, there are a few obligations that must be met. Sure, with the 12 well-trained employees, business may go on for a few weeks or months but eventually, the firm will need to competitively bid for new jobs to keep business coming in the door (assuming other engineers work at the firm). Julie’s family and heirs are now at a crossroad. Do they seek a new employee who can now come into the business and perform those duties? Can the business afford them? Will other vital employees fail to see a future and leave the company as a result? More often than not, a situation like this would result in a fire sale. Families typically pour their entire life savings into the business and never think about how vital a business succession plan is.

The Solution

In Julie’s case, the proceeds from a properly designed succession plan would have given Julie’s family the important funds needed to hire or promote the right person to keep the firm going strong. Business succession planning would have also allowed Julie or her family to sell the business at a premium when they are ready; providing additional cash to Julie’s family when it is needed most.

It’s hard to believe with the access to information at an all-time high, business owners are still allowing their business to remain unprotected. The truth is, many never take the time to even value or appraise their businesses’ worth. They never think about the “what if’s”. Sadly, all the hard work everyone invests in the firm goes away and goes away quickly.

What if the aviation industry never paid attention to the threats to their passengers or planes? What if they didn’t learn from each disaster and make the appropriate fixes so that it never happened again? Would you want to board that airline? There are countless businesses for sale, closed or operating in default in a community near you that failed to plan.

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Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. Neither OneAmerica Securities, the companies of OneAmerica, American Heritage Financial, LLC, nor their representatives provide tax or legal advice. For answers to specific questions and before making any decisions, please consult a qualified attorney or tax advisor.

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All numeric examples and any individuals shown are hypothetical and were used for explanatory purposes only. Actual results may vary.

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