Succession Planning 

Executive and successor 

Planning for the future is an essential part of running any business.

Family businesses face unique challenges, which are why so many of them fail to survive into the third generation. This can be due to a variety of factors. For example, the business might have to be sold to generate the liquid funds to pay estate taxes.  Or surviving family members might have contrasting desires for what to do in the future: some may want to continue the business; others may want to “cash out” and walk away. Whatever the situation, implementing a Business Succession Plan before a triggering event arises can help make any transition go more smoothly.

Things to Consider 

Buy Sell Agreements 

Contact Us 




Business Succession Considerations

An owner’s primary goals in a succession plan are:

  • To stabilize the business
  • To facilitate the transfer of the business in accordance with the owner’s wishes
  • Minimize eventual estate taxes and expenses
  • Maximize the wealth passed on to the next generation within the family

Procrastination/Facing Reality

Many business owners may resist facing succession issues or feel they can delay thinking about it. Most family businesses have unique characteristics. Envisioning the future under new leadership is daunting.

An owner who is accustomed to controlling and managing all aspects of the business may have difficulty “letting go.” An owner may have greater difficulty grooming a family member than an outsider for succession because of the overlap of family and business boundaries. Some families just don’t discuss money or inheritance issues because such discussions may be perceived as a lack of family trust.

What will happen if you leave the business?

  • Assess risk to your business
  • Examine available options
  • Establish goals for business succession

Is there a clear business succession strategy in place?

  • Develop a written succession plan
  • Determine the value of each owner’s interest
  • Explore what happens if an owner retires, becomes disabled or dies

Does your business have the resources to carry it through?

  • Arrange funding for the business succession plan
  • Allow transfer of ownership

How will the sale or transfer of a business affect your estate plan?

Planning for and managing business succession is critical to the continuation of a business; be it through transfer, sale or merger.

Having a business succession plan, as well as a means of funding the plan, are the keys to a successful transfer or exit strategy. Ongoing reviews and updating of the plan ensures that the business stays intact until succession occurs.

Effects on Morale and Productivity

Having a fully funded buy-sell agreement in place as part of a Business Succession Plan can provide a tremendous boost to employee morale and productivity.

It reassures employees that the venture will continue even if the owner dies or becomes disabled. It can help eliminate much of the turmoil and uncertainty that is common in the succession of small businesses.

Buy-Sell Agreements

Buy-sell agreements can provide an effective way to transfer ownership of a closely held company back to the business or to other owners or key employees.

This strategy can be beneficial to provide for the family of the deceased or disabled owner and to ensure the continuation of the business for the remaining owners.

A well-drafted and properly funded buy-sell agreement can set a value for the business or designate a formula to use in determining the value.

It can also specify the funding vehicle to be used for the buyout. These measures reduce the amount of strain put on the business and the family of the deceased business owner.

Advantages of a Buy-Sell Agreement

  • Provides a guaranteed market
  • Can set a value on the business
  • Reassures creditors, customers and employees


Contact Form
All fields marked with * are required
First Name*
Last Name*
Current Customer?
Are you a current customer?* Yes No
Tell us more about your needs...
All personal information which is provided via this form is secured during transmission and processing.

By providing your email address you consent to receiving email messages from Northwestern Mutual.
Have an Advisor Contact You
Find an Advisor
Customer Service
Most Requested Forms
Tools and Resources 
Related Topics