Estate planning and probate attorney Mike Witzke gives a basic overview of succession planning and why it is important for minority business owners to have a plan in place for their business.

1. What is succession
planning?

2. “Succession planning is the
process which explores the
options available to a business
owner to exit his or her business
in a desired manner.
”
“

3. GOALS
▪ Predictable timing of exit
▪ Personal financial security
▪ Maximize value
▪ Promote long-term growth
and survival of business
▪ Minimize taxes

4. Is succession planning
just about selling the
business?

5. Sale transaction is ONE option for
succession planning
One succession planning option is to sell your business to a third
party
• Selling is often a once-in-a-lifetime deal
• Ownership may represent large percentage of owner’s
net worth
• MBE/WBE owners usually focused on managing/growing
their business, not on how to ready it for sale
However, there are many other alternatives that should be
considered before preparing for the sale process, which can be
time consuming and expensive

6. What happens if you
don’t have a good
succesion plan in
place?

7. Your business runs the risk of several
common pitfalls:
• Selling below fair market value
• Loss of control of timing
• Family tension
• Additional tax
• Unpredictable long-term viability of enterprise

8. What does a business owner
have to consider as he or she
begins to plan for succession of
the business?

9. 7 questions to
consider
1. What is your current role and what would you like your role
to be in the future?
2. How long do you want to stay actively involved?
3. How long do you want to maintain control?
4. Who do you want to takeover once you step down?
5. How much income do you need from the business in the
future?
6. Do you have sufficient retirement savings?
7. How will the transition impact my MBE/WBE certification?

10. Once I start planning, does all of
this go in the business owner’s
will?

11. Estate planning
techniques
• Stock gifts
• Grantor trusts
• Charitable remainder trusts
• Family LLC’s/ partnerships

12. What if the business owner
wants to sell their business?

13. Sale of
business
• Sale to family member
• Corporate redemption
• ESOP
• Buy sell agreement
• Sale to third party

14. I can see the importance of having a well thought-out plan in place.
Where do I start?

15. Preparing for sale
• Start thinking about liquidity well in advance of actually
beginning the process
• Get your “team” together
• Bankers, lawyers, accountants, internal point person
• Well-managed companies sell faster, for more dollars
• “Clean up your house”
• Audit and fix problems
• Proper approach can reduce risks
• Maintain confidentiality
• Retain and motivate employees

16. If the business is a MBE or WBE
are there any special concerns?

17. Special
considerations
• MBE/WBE certifications are not transferable
• If the business is transferred to a new owner, certification
agencies may consider allowing the company to retain
certification if:
• New owner has the experience/expertise to control the
company
• New owner has paid for stock with own money and not
based on earn out
• New owner meets the caps for financial eligibility

18. So, when was your succession
plan last revised?

19. Who can I talk to about
my business?
Michael Witzke
248.593.2948
mwitzke@mcdonaldhopkins.com