Gross Collins has been a trusted partner for close to thirty years. The firm has been by our side as we faced the various challenges our competitive industry provides. The firm has been a vital part of the team which guided us to the successful company we are today.
Tracy Pierce, COO
Precision Concrete Construction Inc.
intend to name a family member to succeed you in running your company, you have
some advantages. The person you'll name (probably your son or daughter, son- or
daughter-in-law) is someone you can identify easily, without an extensive
search. You know that person's capabilities and shortcomings; he or she likely
works for the company now, so you have a good idea of how well the future owner
will do. That said, passing on your company to a family member can pose problems.
Intra-family dynamics should be considered, which may not be the case if your
successor is an outsider. Moreover, there are several methods of relinquishing
ownership, all of which may be closely scrutinized by the IRS.
Making the Right Designation
a family member as your successor can raise emotional issues. Does your son
really want to run your business, working the long hours you've always put in?
Is your daughter truly eager to jump off the partner track at her law firm to
take charge of your company? Be honest with yourself, even if it leads to
have more than one child, it's often the case that one will be the obvious
successor. Passing on ownership to all the children and leaving one to run the
company can lead to strife: The operator may feel like he or she is working to
enrich siblings, and the outside owners might second-guess business decisions.
the child who will manage the company as the sole owner may make sense, from a
business perspective, but it also can deprive the others of a valuable asset.
In such cases, it may be desirable to equalize the inheritances. (If you're
married, your estate plan also should provide for a surviving spouse.)
Situations differ, but life insurance might offer a way to compensate
family members who won't wind up with your valuable business.
Your plan also should focus on the method you'll use to keep
your company in the family. Broadly, here are your options:
it. This mode has the obvious benefit of providing you with income
in retirement, enabling you to enjoy the fruits of building the business.
Coming up with enough cash for the buyout may be difficult for your younger
successor, so it might be necessary to arrange financing or an installment sale
so payments will come from future company earnings, in some manner.
it. Another option is to transfer some shares to your
successor during his or her lifetime. Gift tax may be avoided or minimized by
using discounts for fractional interests in the company while ownership might
be motivational. On the downside, such gifts can reduce the income you'll get
from the business and you should have a strategy for dealing with other
it. You can simply hold onto the company until you die and
bequeath it to your successor. This approach allows you to remain in control
and perhaps receive income from dividends once you stop working. A lack of
ownership, though, might discourage your chosen successor and lead to that
person's leaving for another opportunity.
which of these methods you choose, the IRS may challenge the valuation
involved. A below-market sale, for example, could be recast as part sale and
part taxable gift. Thus, having a reliable valuation of the company should be
part of your all-in-the-family succession plan. A sophisticated approach
might involve a mix of selling, giving, and leaving your business to a younger
relative. Tactics such as retaining income-producing shares while transferring operational
control may be appropriate.
you decide a family successor is right for you, or another exit strategy, HLB
Gross Collins, P.C. can help you define a plan that will be most beneficial to
you and to your successors.
As a former principal at HLB Gross Collins, I am pleased to continue to be able to work with the firm’s professionals as the Chief Financial Officer of a long-time client of the firm. Serving a complex operation such as Mirasco’s is challenging, and Michael Bohling and Iliana Malinov meet that challenge by constantly thinking about our business and being in regular contact with me. Along with the managers, Adil Amou and Michelle Jenkins, they keep us current on reporting and tax developments. Our international scope requires advisors who are constantly thinking about all the implications of our transactions, and the HLB team does a great job bringing us ideas and responding to our questions.
Rick Hamilton EVP & CFO
HLB Gross Collins, P.C. consistently demonstrates integrity, professionalism, and technical ability. Additionally, they adhere to time deadlines, and most of all, display a concern and passion for our best interests.
Curtis A. Pollock Co-COO & J. Bruce Bolick CFO