Feb 29

Is your business succession plan and the Phillies’ succession plan the same?

shutterstock_229038604It’s Baseball Season again.  For those of us who are Phillies fans, we are witnessing the end of an era, with the transition of World Series winning players to the next generation of Phillies.  Do the Phillies have a succession plan in place for the baseball team?  Lifelong fans certainly hope so, but if the Phillies do not have a succession plan in place, that would put them in the same category as many of the family businesses in the region.

Business succession plans, which address the transfer of ownership and control of a business from one generation to the next, are integral to the long term survival of family and other privately owned businesses. Despite their importance, most family and privately owned businesses do not have a plan in place or if they have a plan it is outdated and it does not reflect the current reality of the business. Plans were often created when specific individuals were working in the business and were never revised when circumstances changed.  The recent article written by Diane Mastrull of the Philadelphia Inquirer highlights the issue of the lack of business succession plans in place among family owned businesses in the Philadelphia Region and talks about the consequences of failing to put a plan in place.

Every business should have a succession plan in place. An effective succession plan can help a business grow by providing long term certainty and stability for owners and non-owners alike. An effective plan can help any business continue in the future. If done correctly, an effective plan can help pass on valuable assets in a tax efficient manner.  With federal estate and gift tax exemptions at all time high levels, there are many options available to business owners to transfer all or a portion of a business to the next generation in an orderly and tax efficient manner. Lastly, an effective plan can, in certain circumstances, provide peace in some families.

For those of us who will be watching this year, we will have to wait to see if the Phillies have a succession plan in place and if it will be effective.  For those of you that own a family or privately held business, don’t wait.  Make your plan today, consult with your advisors and review it on a regular basis.

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