Business Succession Options in North Carolina
Business succession plans address the future growth or disposition of the business upon a planned succession, or the death or incapacitation of the owner. Transitioning a business under these circumstances requires careful review and assessment. Poor business succession planning could translate to business failure or reduced longevity.
What options do owners have?
Merger. A plan may include directions for another company to take over management and either continue operating under the existing name, completely merge into the other company, or brand the merger with a new company name. Management selection needs will need to be addressed in the plan.
Internal succession. Family-owned businesses commonly elect to train a relative to take over the business. Some government-sponsored investment programs allow employees to enjoy tax credits for buying into the company (through employee stock ownership plans). This option should include employee skill assessment.
Gift or public sale. Depending on the goals of the business owner, there may be advantages to gifting the business to another business owner, an appointed family member, or designated employee. Options involving the purchase of the business may involve seller financing (the business provides a loan or distributions to the purchaser. The purchaser may use a third party loan as well.
The options above should be addressed when the plan is created, and again during routine reviews. During reviews, other items to discuss with a lawyer include:
- Business debts and insurance
- Business-related real estate
- Internal and economic factors affecting the goals of a business succession plan
- Legislation changes creating challenges or advantages
- Business valuation
Business owners in North Carolina have decisions to make about how they plan to transition their companies, and they also need to satisfy the Department of the Secretary of State’s document requirements respective to these dissolutions or mergers. Curious about starting or revising a business succession plan in North Carolina? Read a few business succession planning tips and contact our Chapel Hill estate planning lawyers.