Georgia entrepreneurs often focus so hard on making their businesses succeed that they fail to plan for the succession of ownership in the future. Among business owners, 73 percent of them lack any type of formal plan for selling a business or transferring it to heirs. A business, especially a family-owned one, represents an illiquid asset. It may produce income but its actual value could be hard to identify without a purposeful financial analysis.
A formal financial evaluation would place a value upon the business so that it could be transferable to new ownership. This understanding of value could then be compared to the goals of individual business owners. For example, an owner who wishes to cash out wealth for retirement would need to determine if the business can continue to function after the selling of assets.
For those who want to pass on their businesses to the next generation, they will need to groom people for leadership positions. When selecting candidates, consideration should be given to their ability to get along with inactive owners who might have trouble letting go of control.
Along with the important need to quantify the value of a business, a person who wants to create a succession plan could seek legal help to evaluate shareholder agreements and then draft an overall estate plan. An attorney could be helpful in preparing the documents that would facilitate the transfer of a business to the next generation of owners. Legal counsel could also suggest powers of attorney in the event that the owner becomes incapacitated and incapable of making sound business decisions.