What is business continuation/succession planning? As a business owner and advisor myself, here is my answer.
It is the planning required that facilitates the disposition of a business interest or ownership transfer in the event of disability, death or retirement. In other words, it's planning designed to ensure that the business continues according to the owner's wishes, including appropriate compensation to specific heirs and beneficiaries.
The types of plans implemented are commonly referred to as Buy/Sell Agreements. However, there is not a "one size fits all" plan that's available. There are several ways to configure these plans depending on the type of business entity and particular ownership interest.
Examples are: Entity Purchase Agreement; Cross Purchase Agreement; Trusted Cross Purchase Agreement; Key Person Buy-Out Agreement; "Wait & See" Buy/Sell; Stock Redemption.
I plan on writing another piece where I'll briefly describe each one. In the meantime, if you don't have a plan, get one, and if you do, it's a good idea to make sure it's up-to-date. Lastly, it's important to have a qualified attorney draft the agreement. For questions you may contact me.
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