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Virtual General Counsel LLC

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Owners should think about how to pass their business on to their successors

| Nov 20, 2020 | Business Formation |

When forming a business, the last thing on a Denver resident’s mind may be how to hand the business on to the next owner.

However, it really is never too early to think about business succession planning sooner rather than later.

After all, too many Colorado businesses take off after their initial launch only to fail when it comes time for the founders to retire and new leadership to take over.

Without appropriate planning, the business may suffer from disputes and litigation, adverse tax consequences and other problems that can sink and otherwise promising business.

There are some basic tips for ensuring a smooth business transition

There are some fairly basic things a business owner can do to make sure her investment continues after she has to move on.

For one, the owner or owners will need to communicate often and clearly with stakeholders about their plans.

On a related point, the owners will need to make sure they have a capable successor to the business in mind.

While it might seem like a good idea to pass the business along to a friend or close relative, it is important that the owners consider whether their successor has the knowledge and character to run the business. It is also important to evaluate their choice’s interest in taking the business over.

If there is no obvious successor, then the current owners may need to evaluate other options.

While to some extent owners of a business can start implementing a business succession plan on their own, there will inevitably be certain legal questions involved.

For example, the timing of how and when to pass along a business can be an important question with significant repercussions.