Business Continuity Planning

For many of your business owner clients, business continuity planning means simply signing a buy-sell agreement early in the company’s life and filing it away. As we know, most buy-sell agreements cannot support an owner’s primary exit goals; namely, selling the business when they want, for the amount they want, and to the successor they choose. This White Paper discusses common deficiencies in both business continuity plan and buy-sell agreements and suggests remedies to support your clients.

For many owners, business continuity planning means simply signing a buy-sell agreement early in the company’s life and filing it away. Unfortunately, most buy-sell agreements cannot support an owner’s primary exit goals; namely, selling the business when you want, for the amount you want, and to the successor you choose.

The problem is that most continuity plans are like quicksand: They appear to provide reliable footing for an owner’s smooth exit, yet the owners and companies they are designed to protect sink when owners exit—voluntarily or involuntarily. As a business owner, how do you create a continuity plan that supports (rather than undermines) your exit goals?

This White Paper discusses common deficiencies in both business continuity plans (Nos. 1 and 2) and buy-sell agreements (Nos. 3 through 7) and suggests remedies. The seven we highlight here are business continuity plans that:

1. Fail to address business challenges; and
2. Neglect the decedent’s family;

and buy-sell agreements that:

3. Are too simplistic.
4. Ignore common lifetime exits.
5. Use cookie-cutter valuation formulas.
6. Are outdated.
7. Are poorly implemented.

Addressing these deficiencies helps you, your family, and your company respond and adjust to both planned and unplanned exits and increases the likelihood of achieving your most important exit goals.