Any family business, however successful, will reach a day when ownership must change hands. A plan of succession for ownership of business interests ensures that the business will continue to operate with a minimum of disruption and can also provide tax benefits to the owner and the successor. The authors detail the various options available to business owners looking to establish succession plans, noting where CPAs can leverage their position as trusted advisors to assist clients with establishing such plans.
Family businesses account for over 50% of U.S. GDP, and 35% of Fortune 500 companies are controlled by families. These companies are vital to the economy, offering stability, a long-term commitment, and responsibility to their communities and employees. Although family-owned businesses are responsible for 60% of jobs in America, a recent family business survey done by the National Bureau of Economic Research’s Family Business Alliance indicates that despite succession being a critical issue for many family companies, only 15% of them have anything resembling a succession plan in place. Furthermore, businesses have a difficult time surviving through multiple generations; just making it to the second generation is a milestone event; only 30% make it through the second generation, and just 12% make it through the third
Family Business Succession Planning Opportunities – The CPA Journal