Business Succession Attorney in Spring, Texas
When should a business owner think about business succession?
When should a business owner think about business succession?
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So ideally a business owner should think about business succession planning when they form the business. Does that happen, most often no because when you’re starting a business you have no idea whether it’s gonna be successful or, you just have no idea. And you also want to put your resources to a place where you can focus on the growth of the business and the success of the business.
But I would still encourage people, when they form the business think about business succession planning because that’s when you’re preparing the governing documents of the business. When you go to a lawyer and they create a corporation, an LLC or a limited partnership for the business owner, those documents come with a partnership agreement, an operating agreement and those agreements spell out how the transfer of the business happens in the event a partner or an owner exits the business, exits because of death, incapacity, bankruptcy, for whatever reason.
And so I would encourage business owners to think about succession planning initially. But also what most frequently happens is the business owner thinks about succession planning as they get older, as the business has matured and the business has value. They start thinking, well, what happens if I can’t run the business any longer and that’s most typically when you see a client thinking about business succession planning.
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Spring, TX estate planning & probate attorney Christine Butts talks about business succession and when a business owner should start planning for it. She mentions that ideally, a business owner should consider business succession planning when forming the business. In reality, this rarely happens because, at the outset, owners are often uncertain whether the business will succeed and need to focus their resources on growth and operational success. Planning for succession can feel like a distant concern compared to the immediate challenges of starting and running a business.
She encourages business owners to think about succession planning early, during the formation of the business. When a lawyer helps establish a corporation, LLC, or limited partnership, the governing documents—such as partnership agreements or operating agreements—can be drafted to address how ownership will transfer if an owner or partner exits due to death, incapacity, bankruptcy, or other circumstances. Preparing these documents thoughtfully from the beginning ensures clarity and reduces potential conflicts later.
In practice, most business owners consider succession planning later in the life of the business, once it has matured and accumulated significant value. At that point, they start asking important questions about the future: what happens if they can no longer run the business, or if unforeseen circumstances arise? This is typically when she works with clients to develop a comprehensive succession plan that protects both the business and its owners.
