[ad_1]
A Bohemia printing company transitions to new internal ownership as founders retire, preserving decades of experience and company culture
[ad_2]
Adina Genn
Source link
Tag: business succession
-
Bohemia printing company shifts to new internal leadership | Long Island Business News
-
How to prepare for the $84 trillion wealth transfer | Long Island Business News
[ad_1]
The great wealth transfer is upon us.
DAVID MAMMINA: ‘It really depends on the person themselves on how they want to determine how their money goes when they pass.’ An estimated $84 trillion to $124 trillion is expected to go from baby boomers to Gen Xers, millennials and Gen Z over the next 20 years or so, notes David Mammina, partner and financial advisor for Coastline Wealth Management.
With these numbers and factors in mind, a reputable estate attorney, CPA and financial planner can help manage that transfer of wealth.
“The team can really look at what’s the best way to deploy trusts. The CPA can determine the best way to save on taxes,” said Mammina, adding that a financial planner can help clients determine how much can be gifted.
Advisors can tailor a program to an individual’s desires: Whether they want to set up philanthropic donor trusts, gift early so they can see the next generation enjoy it, or invest so there’s a bigger pot for their heirs to inherit.
“It really depends on the person themselves on how they want to determine how their money goes when they pass,” Mammina said.
Financial planners will bring in estate attorneys to set up trusts, which helps expediate the transfer of assets. Accountants can start converting IRAs and 401Ks into Roth IRAs, so the assets grow and transfer to the next generation, tax free.
Teaching the next generation about investing, compounding interest, diversification and risk is also key.
“It just makes it a little bit of an easier transition when everybody is part of the picture,” Mammina said.
Focus on income taxes
ASHLEY WEEKS: ‘Very often, it makes sense to involve a professional. It could be a lawyer that serves as trustee. It could be an accountant, a bank or financial institution.’ As baby boomers age, wealth management starts to center on helping younger generations become good stewards of these resources, notes Ashley Weeks, a wealth strategist at TD Bank.
“How do we pass the wealth along with the least amount of friction and protect ‘kids‘ going forward?,” said Weeks, noting that the focus should be on income taxes on retirement accounts.
Instead of selling an asset, you can borrow against it, using it as collateral.
“You don’t have to pay tax when you take out a loan and let that property benefit from the step up in basis at death,” she said.
There are challenges in passing along retirement accounts, which don’t get the benefit of a step-up in basis. One possibility is to convert an IRA into a tax-free Roth account.
“You can pay tax now, but your heirs are not going to be forced to pay taxes on that money when they pull it out after they inherit it,” Weeks added.
A revokable trust allows assets to bypass the probate process and help protect assets from heirs’ spouses, in the event of divorce.
To prevent disputes between heirs, grantors should choose their trustees wisely.
“Very often, it makes sense to involve a professional. It could be a lawyer that serves as trustee. It could be an accountant, a bank or financial institution,” she said.
Diversify your portfolio
BHAKTI SHAH: ‘It’s important to have an independent valuation to understand what the business is worth.’ For family business owners, their company is typically their largest asset and the one that’s most dear to them, notes Bhakti Shah, partner and chair of PKF O’Connor Davies’ trusts and estate division.
If they have concentrated risk in that business, one strategy would be to diversify.
“Diversify by maybe selling some shares outright to create a more mixed allocation in their asset portfolio,” Shah said.
If selling is not an option, gifting–either in outright gifts or in a trust—is another possibility.
Irrevocable trusts provide a greater layer of protection than outright gifts: The asset is protected from creditors or former spouses.
Work with a team of trusted advisors: An accountant to ensure assets are properly transferred; a lawyer, for a trust, which is a legal entity; and a financial advisor, to manage the transfer of assets.
“That whole team of professionals is working for you to make sure they’re looking at it from all different angles so that your wishes are being handled according to plan,” Shah said.
For business owners, having a plan that defines the transition and ownership will put you ahead of the game.
“It’s important to have an independent valuation to understand what the business is worth,” said Shah, who adds that it could help determine their options as they transition out of the business.
Keeping the peace
DAVID FRISCH: ‘The founder has to understand the tax consequence of selling. Then you start bringing the family in.’ For business succession planning, founders must decide how involved they want to remain with the business. In instances when they’re closely linked to their companies, founders usually get a higher payout if they stick around for a year or longer before transitioning out, notes David Frisch, founder and CEO of Frisch Financial Group.
“The first step—before the family gets involved—is having the conversation with the owner to say, ‘What do you want to do?” Frisch said.
There’s also the question of how to divide all major assets between the children: the business, real estate holdings and the brokerage account.
“The founder has to understand the tax consequence of selling,” said Frisch, adding, “Then you start bringing the family in.”
In addition to a financial advisor and attorney, you might want to also bring in a psychologist to handle the emotional issues of who gets what, who becomes the boss, etc.
“If nobody wants to run it, it’s certainly easier to sell to a third party, because it takes a lot away from the potential fighting that may be involved,” Frisch said.
He advises that founders should plan well ahead of retiring: “Five years before is typically when the founder should start thinking about the next chapter.”
[ad_2]
ARLENE GROSS, LIBN CONTRIBUTING WRITER
Source link -
Hermès' Heir Wants to Give Half His $12 Billion Fortune to His Gardener | Entrepreneur
[ad_1]
It’s Succession meets Knives Out—only this Hollywood-like plot is real.
Nicolas Puech, 80, the estranged Hermès heir, announced a bold plan to adopt his 51-year-old former gardener and handyman to bequeath him his $11 billion fortune. Puech is the grandson of the founder of the fashion giant and owns 5.7% of the company.
According to the Swiss publication Tribune de Genève, the reclusive Peuch has little contact with his family. Single and childless, he considers the gardener (whose name has not been released) to be like kin. Not much else is known publicly about the gardener besides that he comes “from a modest Moroccan family” and has a Spanish wife and two children.
Reversal of fortune
Previously, Peuch promised to hand over his money to his foundation. But earlier this year, he had a change of heart, sending a “handwritten note” to the foundation expressing his wishes for a new succession. Shockwaves ensued.
With no direct heirs to his name, the billionaire may get away with his plan. But not without major legal hurdles. According to Tribune de Genève, adopting an adult child in Switzerland is complicated—add that the adoptee stands to earn billions, and it becomes a high-stakes battle.
Bad blood
This is not the first time Puech has clashed with his family. In 2014, he left Hermès board of directors after a hostile takeover bid by fashion rival LVMH. But he retained his shares, making him among the wealthiest individuals in Switzerland. He now lives in a mansion with 66 other inhabitants in La Fouly, according to El Pais.
Hermès, now the third-largest publicly listed company in France worth an estimated $200 billion, is no stranger to the spotlight. Still, this latest development has taken center stage, evoking questions and curiosity about the future of this storied empire.
[ad_2]
Jonathan Small
Source link -
Succession Planning Is Vital — Here’s What You Need to Do. | Entrepreneur
[ad_1]
Opinions expressed by Entrepreneur contributors are their own.
Business owners know a thing or two about working long hours. Without fail, there’s always something to do. But what about putting in the time to develop proper business succession planning? A recent report from SIGMA shows that nearly 1 in 10 leaders believe succession planning is not worth the time and money that it costs. Are you that one? There will be a time when you’ll want to transition ownership of the business to another party, and it may be sooner than you think.
While seemingly straightforward, succession planning for business owners can take several different forms, each with its own set of pros and cons. You’ll want to understand your options and how they relate to what you hope to accomplish. No matter when or how you transition ownership, your results will be impacted by how much effort you put into planning.
Related: Succession Planning: It’s Never Too Early to Start Thinking About the Future of Your Business
Starting with the end in mind
An important trait in highly effective people is the ability to come into any given situation with a clear understanding of the destination. It allows for better identification of the necessary steps to achieve a desired outcome. That’s business succession planning in a nutshell — or, at least, that’s the goal.
If you think success planning is as simple as handing over the reins to family, you’d be mistaken. Only about half of heirs want to take ownership of the family business. That’s a stark difference from what business owners actually think, with 67% believing that their heirs want the business. Even if the family member is ready to take over, succession planning for business owners takes time and preparation. Below are five strategies that will help you start planning for succession and the thought that needs to go into it.
1. Carving out the time necessary
In our experience, it’s best to start creating a succession planning roadmap at least three to five years prior to the date of the planned transition. Without a roadmap, you might unknowingly create hurdles to a successful transition instead of facilitating a clear path to new ownership. In fact, it could even put into question the financial security you desire.
Let’s say you’ll be selling the business to an unrelated third party. The financial impact will be significantly different than “gifting” the business during your lifetime or transitioning ownership upon your death by way of an estate plan. You must determine the value needed from the sale to maintain your lifestyle once you no longer own the business — and that’s just the start.
Related: Most Family Businesses Don’t Have a Succession Plan in Place, But That’s a Huge Mistake
2. Making sense of a sale prior to the sale
Selling to an unrelated third party can present several challenges. Identifying potential buyers that are qualified to purchase the business isn’t always easy nor is taking all the appropriate steps to prepare the business for a sale. A great deal of information will be required as part of the buyer’s due diligence process. How long will the process take from start to finish?
Then, there’s the question of whether to engage a business broker or investment banker to assist in the sale. How will they evaluate potential offers? What potential issues might come up in the purchase agreement? Are there any confidentiality concerns? Is the sales process being done in the most tax-efficient manner? Have you considered what you’ll do after the sale?
3. Balancing business continuity and succession planning
We recently worked with an owner who had several separate yet related businesses. They only wanted to sell one of them. The process started with a full valuation and then the determination of whether selling one business would be detrimental to the value of the combined businesses. They also wanted to explore whether they could sell the business to a group of employees and how that might compare to an outright sale.
We conducted an assessment to identify the business owner’s goals in the ownership transition. Then, we helped them prioritize those goals. After talking with several interested buyers, including the employees, the owner decided to move forward with a large buyer who expressed interest in acquiring the business and real estate.
4. Arriving at a smart fiscal decision
The owner’s choice of buyer came down to the fact that it would enable them to achieve the majority of their highest-priority goals. Because of advanced planning, the owner knew what their business was worth, the minimum value they’d need to receive from the sale and the potential issues the buyer would likely raise.
Ultimately, the buyer did make an offer that was lower than the valuation, but we were able to negotiate a more acceptable offer that provided for full payment at closing. This provided the certainty that the owner sought, and the transaction was closed within a reasonable amount of time. All parties were pleased with the outcome.
First Business Bank recommends you employ a team of professionals to help you come up with a proper valuation for your business — including “your CPA and business appraiser. You might also include your attorney, wealth management professional, business banker and possibly an investment banker/business broker in the discussion to ensure coordination.”
5. Putting the pieces together
Creating a succession plan for your business always starts with defining the goals you’d like to accomplish as part of the ownership transition. It’s for this reason, among many others, that we recommend getting the ball rolling as early as possible. Once you’ve defined your goals, you can focus on arriving at a fair market value for your business today.
With that in mind, how much value would you need to realize to be financially independent after the transition? Will the sale allow you to live your desired lifestyle? If there’s a gap between the fair market value and what you need to achieve your future income needs, then develop a plan to increase the value of your business within the timeframe you’d like for the transition.
Related: 4 Lessons on Succession Planning for Entrepreneurs
Getting what it’s worth
We firmly believe that the more time and effort you spend on business succession planning can exponentially improve the probability of a satisfactory outcome. The more you prepare and understand what to expect, the smoother the process will go for both you and the buyer. It also doesn’t hurt to have an advisor on hand who can properly assist you through the process.
Ultimately, preparation is key to successful succession planning for business owners. It will save you time and could even help in building trust with the buyer, which can minimize conflict as the process moves forward. When the buyer has confidence in the information they’re receiving and your integrity, it provides you with more leverage in negotiating the final price and terms.
In the end, a succession planning roadmap increases the chances that you’ll get what the business is worth and be able to maintain your lifestyle for years to come. It’s all in your approach.
[ad_2]
Larry Guess
Source link -
How to Sustain a Family Business Over Multiple Generations | Entrepreneur
[ad_1]
Opinions expressed by Entrepreneur contributors are their own.
Preparing the next generation for leadership is one of the hardest parts of running a family business. Whether the company has been run for several generations or just one until now, knowing when to hand over the reins to the next leader is a challenge. Identifying the proper person for the task, and strengthening them for it, is something many family business owners grapple with during their careers.
Of course, not every family-owned business has a successor to take on the leadership responsibilities of the organization. Some company founders may not have children or other relatives they can rely on to run the business, and in other cases, relatives have no interest in taking the helm of the company. Senior leaders with their leadership transition mapped out are at an advantage, but they often worry about their relative’s ability to handle the upcoming challenges they know will arise.
That said, preparing the future generation for what’s to come is vital.
Related: Your Family Business Won’t Survive If You Don’t Plan for the Leadership Transition
People learn through experience, not lectures
Think back to when you were a young adult, navigating the world outside your parent’s proverbial nest. You probably encountered several unexpected scenarios that have probably left an impression on you to this very day.
Perhaps you bought your first car without any assistance and wound up with an expensive monthly payment at a high-interest rate because you didn’t understand the importance of building up your credit. Maybe you fumbled an early relationship or went overseas for the first time. Typically, these experiences make for memories that stay with us for decades, and all of them can act as learning experiences that we look to when we encounter scenarios that require us to act.
While you may remember the countless talks your parents gave you, they likely didn’t resonate as a genuine experience might have. They certainly outlined the potential consequences of our actions, but unless you actively went against the advice, you likely never experienced the repercussions.
As such, It can be tempting to swoop down and stop your child from making a decision you know will adversely impact them, but allowing them to experience the consequences makes them better future decision-makers, which will be positive for the family business.
Give the next generation room to grow
Lecturing the future generation on what it takes to run the business isn’t going to provide the outcome you’re looking for. Instead, up-and-coming leaders need to have their own experiences away from the company (and the eyes of their parents) to realize their capabilities fully.
If “saving the day” is a sticking point for you, perhaps it’s time to let your children experience life outside of your constant observation. If they’re planning for college, for instance, promote universities that are out of state or overseas.
It’s essential to allow the next generation to identify potential solutions to problems and try them out. Even if you know the solution won’t work, they’ll enjoy the excitement of bringing a new idea to the table and implementing it. They’ll have the space to grow into themselves and be better prepared to deal with adversity as a result.
Allow your successors to develop their own identity
A child or relative who grows up in the shadow of the family business needs time away to build their identity. The family name may be quite familiar in their local community. People will likely associate them with their parent’s name and the company, and sometimes, being the child of a family business owner makes it easier to find acceptance in prep schools and college.
Pushing them to create their own identity by working toward a degree of their choice and joining clubs or activities that interest them is crucial. Don’t push your agenda; allow them to pursue their own identity.
In addition, rather than hiring your relative to the family business fresh out of college, require them to work for another organization for a few years. Experience away from the family business will open their eyes to new ways of handling work-related issues that may benefit the family company in the future.
Related: How to Successfully Prepare Your Family Business for the Next Generation
Push character development activities
People who always have someone there to “bail them out” are never given the opportunity to learn their capabilities. Whether you’re the founder of your family business or a second-generational leader, you’ve likely failed in some of your endeavors, and you likely remember your failures and what it took to overcome them quite vividly.
Facing complex challenges and pushing through them is part of developing a solid sense of character. Rather than allowing them to give up and let someone else take on the task, future leaders must work through their hardships.
Give your future leaders a chance to fail. As harsh as that may sound, they’ll learn that hard work and thoughtfulness are critical to overcoming obstacles and gaining the confidence they need to deal with future setbacks.
Don’t hand everything over on a silver platter
You’ve probably worked extremely hard to get where you are today, and you’ve just as likely seen significant successes, losses, and a bit of everything in between. You’ll want to ensure that your future leaders understand what you went through, even if they weren’t there to witness it in your company’s early days.
Rather than handing your child the keys to your business outright, make them work for them. If you’re nearing retirement age and they’re unprepared to run the business, find another family member or a trusted external advisor to handle it for a while. They can mentor the next generation and move them along the succession path according to an appropriate timeline.
It can be tempting to assume the next generation is ready to take over your company and allow you to enjoy your twilight years, but you must ensure they have time to develop skills and realize their identity. The best things in life come from hard work and determination, so give the future generational leaders of your company the space to build their character before bestowing the business upon them.
[ad_2]
Shawn Cole
Source link -
‘Succession:’ 5 Lessons the Roy Family Could Stand to Learn | Entrepreneur
[ad_1]
Opinions expressed by Entrepreneur contributors are their own.
For three seasons, HBO’s award-winning series, Succession, has been centered around what the show’s title suggests: Who will inherit control of the Waystar Royco? As someone who has spent the better part of my career working with the real-life Logan Roys of the world — we’re talking ultra-wealthy individuals, often with children from multiple marriages, sitting at the helm of major corporations — let’s just say I have thoughts on how Logan Roy, the patriarch of the Roy family and founder of Waystar Royco, has orchestrated the company’s succession plan.
As we head into the highly anticipated fourth and final season, I’ll share, based on my extensive experience — as a planner, strategist and personal advisor for individuals and families as well as a pioneer and premier authority on legacy planning — five lessons the Roy family could benefit from learning.
But first, let’s recap where we left off. Logan Roy is set to relinquish control of his media and entertainment conglomerate. But rather than handing the reins to one of his three children, in a surprise twist, he says he has decided to sell — not merge — Waystar Royco to streaming platform GoJo. This means none of Logan’s children will take over as the buyout deal would completely cut them out of the business.
Related: What Entrepreneurs Can Learn from HBO’s ‘Succession’
It’s a move that no one expected, or even thought was possible. A stipulation that was negotiated by Logan’s second wife as part of their divorce settlement protected the children from ever losing control of the company. Logan Roy would need the children’s unanimous consent for any change of control — or so we thought.
In the final moments of the season, Logan Roy revealed he renegotiated that divorce settlement, and the children no longer have such power. It would appear heading into season 4 that Logan Roy is (yet again) in complete control of Waystar Royco’s fate, at least for now.
While this succession nightmare makes for entertaining TV, there are some real lessons we can learn based on how the show panned out. So let’s dive right in!
1. You absolutely need a succession plan for your business
Okay, if there were a succession plan, then there probably would not be a show. That said, Logan Roy is in his 80s, and yet there is no plan for who will take over as CEO of Waystar Royco should he die or become incapacitated, nor does there seem to be a plan in place for what happens to his wealth and controlling shares of the company. While not uncommon, this is completely irresponsible. A succession plan ensures a smooth transition upon a CEO’s resignation, death or incapacity and helps avoid the risks of lost revenue, decreased productivity or a damaged reputation.
2. A prenuptial agreement is a must
A prenuptial agreement is absolutely necessary to protect your business. Without one, you risk your business becoming a marital asset subject to divorce proceedings. Had Logan Roy had a prenuptial agreement, his shares of Waystar Royco could have been clearly designated as non-marital assets to which his ex-wife had no right or entitlement. He could have retained complete control of the company, and his children would never have had the opportunity to band together and potentially block a sale or merger of the company. Even worse, the provision that was negotiated actually incentivizes Logan to pit his children against each other so they are never a unified front — which brings us to our next issue.
3. Family success is built upon healthy communication and trust
A now-famous study conducted by Roy Williams of the Williams Group surveyed 3,250 families over a 20-year period and found that the reason 70% of intergenerational wealth transfers fail is because of a breakdown of communication and trust within the family unit. The Roy family could be the poster children for this study.
There is absolutely zero trust amongst the family members, nor is there healthy communication. As a result, the reality is that Logan’s fortune will most likely be squandered quickly after his death. If Logan wanted his fortune to last generations, he would have to create healthy lines of communication amongst the family that emphasized transparency and trust. Regular family meetings and outings are one way of accomplishing this. One client of mine even had a family newsletter that went out regularly.
4. Money does not buy happiness
I don’t know about you, but I do not desire to be a member of the Roy family. Despite their wealth, they just don’t seem like happy people. Perhaps that is because, as the old adage goes, money cannot buy happiness. Well, that old adage has been backed by science. According to positive psychology, happiness in the sense of your overall well-being and flourishing as a human consists of five elements (referred to as “PERMA“): positive emotions, engagement, positive relationships, meaning and accomplishments. Money and material possessions only produce temporary gratification and not long-term happiness.
Related: Succession Planning: How to Ensure Your Business Will Thrive Without You
5. Take the time to discover your life purpose
The fundamental flaw with every character in HBO’s Succession is that each lacks a sense of life purpose. We do not know why Logan Roy created Waystar Royco or what the company’s mission is. It is suggested that Logan grew up impoverished and under harsh circumstances around the beginning of World War II. Are we to believe that Logan’s drive is fueled by a desire to escape, and never return to, those circumstances? His children, on the other hand, seem simply to be vying for their father’s love and approval. In other words, everyone seems to be stuck in some form of trauma, as opposed to pursuing some greater life purpose.
The most successful clients I have worked with, in terms of living happy, fulfilling lives while achieving great financial wealth, are those who are not defined by their circumstances and have lived their lives in pursuit of a greater purpose.
[ad_2]
Daniel Scott
Source link -
Jack Veale Releases Expanded Third Edition of the Sudden Death Checklist
[ad_1]
Business continuity specialist Jack Veale announces the release of the Third Edition of his comprehensive Sudden Death Checklist.
Press Release
–
Sep 28, 2016
West Hartford, Connecticut, September 28, 2016 (Newswire.com)
–
Following the popularity and industry acceptance of Jack Veale’s Sudden Death Checklist, Mr. Veale and his team have worked to produce an even more comprehensive edition of this industry-leading, end of life and business succession workbook.The workbook, at first glance, is daunting. It is comprised of a full, 126 loose leaf pages that the purchaser puts into a binder so that essential documents and notes can be added easily within the pages. However, on closer inspection, the reader comes to the understanding that the number of pages in The Sudden Death checklist are necessary in order to provide a comprehensive checklist that covers an array of individual, family, and corporate scenarios.
It is my hope that business owners and their families will, with the help of their financial advisors, make use of this checklist to ease the burden of making difficult – and possibly rash – decisions during a time of understandable, emotional upheaval in their lives.
Jack Veale, Author of The Sudden Death Checklist
It is important to note at this point, that The Sudden Death Checklist has been specifically designed to be completed with the participation of a spouse and family along with guidance from an individual’s financial advisor. The inclusion of the professional financial advisor within the process – in the opinion of this writer – is wise, as it gives some unbiased input and a stabilizing force to otherwise emotional topics.
Diving deeper into the end of life planner that is The Sudden Death Checklist we find the following features:
· Clear Instructions – Directions given for the effective use of the checklist are concise and well written.
· Comprehensive Checklists – The author has obviously drawn from years of experience in dealing with various family and business transition situations following the death of a business leader.
· Compelling Topics – The Sudden Death Checklist deals with everything from funeral planning and wills to company structure, governing issues, insurance considerations, and the plan for smooth transition to new business leadership.
· Common Sense Organization – The inclusion of space for necessary records such as computer passwords, credit cards, phone contacts, and healthcare proxy demonstrates that The Sudden Death Checklist has been thoroughly researched and meticulously planned with real people in mind.
· Caring Touches – Throughout the workbook are found phone numbers of support groups that can help with the emotional fallout of a sudden death and contact information for government agencies and organizations that will have to, by law, be contacted in the event of the business owner’s sudden death. This kind inclusion saves the family the time and energy of digging up that required contact information.
Also in this Expanded Third Edition of the Sudden Death Checklist:
· More cross-references and a fuller index for easy navigation
· A more enhanced Trustee/Executor checklist
· A checklist for instructions concerning everything from social media accounts to distribution of heirlooms after the funeral of the business owner.
In speaking with Jack Veale, author of The Sudden Death Checklist, this writer was interested to discover that two other editions of The Sudden Death Checklist are currently in the works to address those who play specific roles. They are The Executor Checklist and The Trustee Checklist and are set to be released in late 2016.
When questioned about his goals for The Sudden Death Checklist, Jack Veale said, “It is my hope that business owners and their families will, with the help of their financial advisors, make use of this checklist to ease the burden of making difficult – and possibly rash – decisions during a time of understandable, emotional upheaval in their lives. I have seen too many families and companies go through struggles that could have been avoided if the business owner had simply gone through such a checklist and made thorough end of life and business transition plans.”
About Jack Veale:
Jack Veale, CMC, is an internationally recognized consultant, who advises closely held, family-owned companies, including ESOPs, on business succession, ownership strategy, and leadership development. Over the last 25 plus years, Jack has assisted hundreds of companies in many industries and countries, offering solutions covering strategic planning, succession planning, corporate governance, team training and crisis management.
Jack has authored or co-authored a number of books, including: “Creating Strategic Innovation,” “Don’t Do That!” and “Sudden Death Checklist for Business Owners and Their Families/Employees.”
Contact:
To learn more about The Sudden Death Checklist and Jack Veale go to suddendeathchecklist.com
Source: PTCFO, Inc
[ad_2]