Business Owners Seek Smooth Succession

Bob and Delores

For most of their married life together, Bob and Delores had no trouble talking about money matters. It was a necessity for them since Bob, at age 55, owned a small manufacturing company and so much of the family’s fortunes rose or fell with the cycles of the economy. Delores, 53 also worked in the business as the Chief Financial Officer.

Lately though they had been having some heated discussions and Delores thought she knew why. Until recently, most of their decisions were based on whether to spend on certain luxuries or save money. They had similar goals and tastes, which include great enjoyment of their Florida condominium and sailing on the lake in the summer. But now their son wanted to join the company and Bob wanted to retire by the time they were both 60. They were facing money and life decisions that were more complex than simply what to save.

They asked other small business owners for referral to a professional planner - someone who had experience with family owned business succession issues. Also important to them was finding someone willing to spend the ongoing one on one time they felt was necessary to find solutions that matched their particular circumstances.

They found Charlie, an advisor who specialized in financial matters for family business owners. When they met him over lunch he emphasized his personal family business experience - the good and the bad! Bob and Delores talked from salad through dessert about their complex needs and felt confident that Charlie understood the myriad decisions they face. What appealed most to Bob and Delores was that Charlie sought to collaborate with their other advisors to tailor a successful plan for their unique situation.

Over the following months Charlie helped Bob and Delores explore the advantages and disadvantages of tax strategies such as gifting versus using a family limited partnership to the outright sale of the business. As part of that dialogue they explored ways to grow the value of the business. They also reviewed the benefit plans as a way to assist Bob and Delores’ plan for their retirement.

The special tools combined with the experience and expertise of the team led by Charlie resulted in a succession plan that gave Bob and Delores a more secure future. What did they see as the key to success? “Charlie understood the dynamics of our family business as well as the dynamics of the business of our family.”

This is a fictional situation. Neither the investors nor the advisor are real. The description of independent registered investment advisors is for general information purposes only and does not necessarily reflect the services offered by any particular advisor. Advisors’ services, investment strategies and conditions for accepting accounts may vary.