A family owned business can benefit the same way as non-family owned business from having well planned out documents that reflect the uniqueness of the business. Formation documents can ensure that ownership rights, powers and responsibilities are understood by all of those involved.
Even documents like buy-sell agreements and estate planning documents can ensure that if tragedy was to strike, the ownership would pass the way it was planned to. This means that if not all your children want to be involved with the business, they can still receive the benefit of what you have built without burdening those that do want to remain involved in the business with having to buy them out.
While a non-family owned business should be building itself up for its eventual sale, a family owned business goes through what is often referred to as succession planning. This is when the business is passed from one generation to the next.
It is not untypical for owners of the business to overlook this as something they need to plan for. The statistics on how many businesses fail under the guidance of a second generation is staggering.
With some careful planning that often resembles what a non-family owned business would do when planning to sell, a family owned business can improve its chances of a successful succession to the next generation.
