Kansas City, MO (PRWEB) September 9, 2007
The majority of family-owned businesses never consider a plan to sell or leave their company to a successor, yet the survival of a company's legacy is likely to die on that very premise. Sildon Law Group, a Kansas City-based law firm, has represented numerous small businesses over the years and has found that history often repeats itself.
According to Myron Sildon, chairman of Sildon Law Group, it often takes a tragedy or a major event before a small business realizes that a succession plan is in order. "In most situations, filling the void of a CEO who retires or dies is an afterthought for a small business," said Sildon. "It's unfortunate, but most small, family-run companies that generate a million or more in annual revenues, believe that succession planning is exclusive to the Fortune 500 or they table the issue to address priorities perceived as more urgent," he said. Listen to Myron Sildon's alternatives to selling a business: http://www.sildonlaw.com/podcasts/sildon.mp3 .
It's not just locally-owned businesses that put off planning for the future. A recent study by Korn/Ferry International found that fewer than 40 percent of organizations have a capable CEO waiting in the wings (Puget Sound Business Journal, Seattle - June 25, 2007). Even more startling is that most closely-held companies can expect to lose their primary owner as a result of death or retirement by the year 2050 and just 40 percent of small businesses will survive to the second generation (Boston Globe, May 4, 2004).
Succession Planning Checklist: How to prepare a survival plan: http://www.sildonlaw.com/f_business.php?key=823498798OIDWJKJDFUI2837492KL
It's not surprising that Sildon's advice to family-business owners is that succession planning should be a top priority. "Ideally, companies need a management team of successors, not a plan dependent only on the owner's children," said Sildon. "Management should start planning five-to-ten years in advance and put a team in place before the owner plans to retire. Without planning, children may unwillingly or uninterestedly inherit the task of running the business."
Jim Foreman, CEO of The Victor L. Phillips Company, was one such client that determined his son would be his successor. Foreman bought what is now a $60 million company several years ago when the original owner decided to sell. He then made his children co-owners along with a few of the company employees and eventually bought the employees out. "Currently, we are creating a succession plan so that Jim's son is his successor with a good management team in place," said Sildon. "When he originally purchased the company, he gave his son more stock and his daughter real estate. The idea was that his son would own the company and his daughter would own the properties and not be active in the business."
According to Foreman, succession planning has made it possible for him and the employees to look forward by proceeding with a plan rather than waiting for the unknown. "Sildon's firm prepared a plan for us that eased my mind," said Foreman. "I know that the business will move forward without me, and it doesn't have to be a mad scramble for my heirs and employees after I am gone."
Additionally, The Victor L. Phillips Company's succession plan secures confidence in lending institutions and vendors which ensures the future of Foreman's business, a company approaching 100 years in operation.
Sildon's firm has saved individual businesses millions of dollars in taxes by passing companies to families without selling it. "There are multiple alternatives to selling a business that circumvents paying taxes on a sale. One such example is passing it on to your children," Sildon explained. However this is not always the best solution for all closely-held companies. According to Sildon, there are situations when clients determine that it is more beneficial to sell a business at an advantageous price, rather than waiting to pass it onto children.
Myron E. Sildon is chairman of the Kansas City-based Sildon Law Group, P.C. He is a co-author of Missouri Bar Association books on closely held corporations, estate planning for the family-owned business and family business planning. He co-authored "A Practical Guide to Buy-Sell Agreements," published by ALI-ABA. He has been listed in the book "The Best Lawyers in America," edited by Steven Naifeh and Gregory White Smith, in the three areas of tax law, estates and trusts, and employee benefits law, and is listed among Kansas City's Super Lawyers. He attended Wharton School of Finance and University of Michigan Law School. He is also a Fellow of both the American College of Trust and Estate Counsel and the American College of Tax Counsel. A complete biography is available upon request.
Sildon Law Group is a center for business strategies in the areas of tax law, business succession, qualified plans, corporations, real estate and estate planning. Sildon Law Group has been in operation for 31 years, helping clients to develop long term strategies for success in their business, as well as personal investments. Attorneys at the firm include Myron Sildon, Cheryl Boushka, Shawn Stogsdill and Phillip Orscheln. For more information, visit http://www.sildonlaw.com.
For more information about Sildon Law Group, visit http://www.sildonlaw.com. For media inquiries, please call Valerie Jennings at 816.221.1040.
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