What is your experience in business succession planning?
Minneapolis attorney Sally Grossman describes her experience in business succession planning.
Email: [email protected]
Phone: (612) 632-3007
I have been working with business owners probably for at least twenty years and I really, really enjoy it. I didn’t start out to do Business Succession Planning. I don’t think anyone does. I started out as an Estate Planner and I always had a strong interest in Closely Hill Corporations and Family Businesses. And, then my clients just sort of pulled me into this area. I would be working with a business owner on their estate plan extensively and the biggest asset in the estate would be the stock. And, I would start asking questions like – simple questions at that, like, “What happens to your stock when you die?” And, they’d say, “Well, it goes three-ways to my kids, like in my will.” And, I’d say, “No, no, no. Don’t you have a Buy/Sell Agreement?” And, I’d explain the Buy/Sell is a contract your Executor has to honor, but it isn’t the Will that distributes the stock. It’s the Buy/Sell. So, then we’d look at the Buy/Sell together, and I’d say, “What happens on your debt?” Lots of times, they wouldn’t know. Or, even if they did know, I’d say, “Well, what’s the price?” They’d say, you know, “Book value.” I’d say, “Great. You’re going to sell your business to me for book value?” “No, no, no, no, no.” But, they’d buy out their partner for book value. And, I would say, “Well, you don’t know how to buy, so whether you’re going to be the Buyer or the Seller, you got to make sure that price is fair, both to you and your family and to your partners, cause you don’t know which side of the transaction you’re going to be on. Book value might be a little low. You know, if you won’t sell to me, but you’d buy from me at book – so those conversations lead me, naturally, into asking the larger questions like, “What happens to this business, not only in your death, but if you retire?” “Who’s going to take over?” And, so we got into some of the psychological aspects. And, I find that fascinating. It’s a great intersection of the intellectual challenge of Estate Planning with, you know, sort of amateur psychology.