How will the transfer of your company be handled if there is a death, divorce, or retirement in the future?
Closely-held companies (family-owned) should ensure that they have clearly identified not only where the business is going in terms of revenues and profits, but to whom the reigns will be passed on after the principals are ready to enjoy their retirement. While most self-made business owners may have an understanding of their company’s worth, independent valuation, is highly encouraged. Is the company worth anything at all without the main protagonist? Is the founder the personification of the Company itself, and is this good or bad? What are the Company’s assets, tangible – easy to identify, like equipment, buildings, inventory, etc. and intangible – not so easy to identify, like customer lists, trademarks, patents, methods and processes, or intellectual property?
The worth of the company should be evaluated periodically, with alternative scenarios such as the unavailability of key players.
Beyond valuation, there are numerous other issues to consider. For example, if shares of the company are transferred to other individuals via a trust or through probate, is the transfer in conflict with partnership agreements, buy-sell agreements, operating agreements, or by-laws? Does the new shareholder have any idea what to do with the company?
Clearly, planning your path is a necessity. Contact The Law Offices of Dominic E. Rainone, PLC to address your specific situation.