Go Buy Buy? Succession Planning Strategies Can Ensure Your Business Survives Your Loss and Thrives for Future Generations

By Druckman, Amanda | Journal of Property Management, May-June 2004 | Go to article overview

Go Buy Buy? Succession Planning Strategies Can Ensure Your Business Survives Your Loss and Thrives for Future Generations


Druckman, Amanda, Journal of Property Management


The last reality any of us want to confront is our own mortality. Statistics show more than 80 percent of family business shareholders want their companies to survive after they're gone, but only 30 percent actually do. Industry experts agree that for owners, the cost of doing something for future generations is cheaper than the cost of doing nothing at all.

Buy-Sell Agreements

To ensure current and future generations of your property management business will be protected from buy-out, financial mismanagement or even bankruptcy, buy-sell insurance agreements are a proactive option to consider. Simply defined, a buy-sell agreement (variations include cross-purchase and stock redemption agreements) is a provision that allows the seamless transfer of company equity in the event of a partner or owner death. To fund this, the company's value is determined and life insurance is purchased based on fractional ownership.

According to Daniel P. Grealish, chairman of Henderson Brothers, Inc., a Pittsburgh-based insurance provider, in most cases the insurance is owned by the partner (instead of the insurer), and a contract obligates a surviving partner to purchase the deceased's stock at a prearranged price with funds from the paid-out insurance. The life insurance provides the surviving partner or family member with the funds to purchase the remainder of the business regardless of their financial circumstances, said Allan Goldstein, CLU, CFC, founder of Northbrook, III.-based Goldstein Financial Corp.

"As in any business, continuity is obviously important to the heirs," said Byron Udell founder and CEO of AccuQuote, a Wheeling, III.-based insurance provider. "When it comes to planning for after you're gone, first, you can make sure your family is taken care of. Second, you can put plans in place to make sure key employees can buy the business. If people take time to plan, clearly, everything is better."

Goldstein advised that if you're in business with another individual, and you both agree that you want your partner to purchase the business if one of you dies, begin working on the buy-sell agreement while you're both healthy.

Don't have a partner in your business? It's not an obstacle to buy-sell planning. Goldstein said a business owner who still wants to enable someone else (such as a family member, employee or even another independent business) to buy the firm if he or she dies should purchase a life insurance policy naming the other party as the owner and beneficiary or set up an escrow arrangement where the funds would be made available to that other party if a death occurs.

Gather Expert Advice

A firm's attorney, accountant and life insurance professional will structure an agreement that works to the best advantage of the participants.

"People say they don't care about what happens after they die, and I believe them," Udell said. "As an insurance provider, I cannot trick people into caring, but I can translate those thoughts into actions and help them realize a buy-sell plan."

Udell advises prospective buy-sell plan customers to seek professionals with either a Chartered life Underwriter (CLU) or Chartered Financial Consultant (CFC) designation. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Go Buy Buy? Succession Planning Strategies Can Ensure Your Business Survives Your Loss and Thrives for Future Generations
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.