Water Well Journal

November 2022

Water Well Journal

Issue link: https://read.dmtmag.com/i/1482057

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Page 27 of 71

where conflicts exist among those goals, and then determine how to reconcile those conflicts and prioritize the goals we will seek to satisfy through the plan. And remember . . . perfection is the enemy of the good. Instead of seeking perfection, strive for a plan that adequately achieves most of your key goals. We can always revisit the plan down the road and make further tweaks as needed. However, if perfection is the goal, we'll never get any plan in place, and that will be a certain disaster. 3.) No two succession plans are the same Every business is different. Every family is different. So, it stands to reason that every succession plan will be different. While that seems like a very simple concept, it's easy to fall into the trap of assuming that the plan your friend imple- mented at their company will work just as well for you. The good news is that when we identify the goals and reconcile any conflicts among those goals, there's almost cer- tainly a strategy we can come up with that will work well for your unique situation. The important point is to keep an open mind throughout the process. Many business owners have a predisposition to a particular strategy, only to find out there's a strategy that actu- ally works better in this specific situation. And what exactly are those strategies? 4.) You have lots of choices—get educated about them Most business owners gravitate toward two of the more common exit planning options: pass ownership to a family member or sell the business outright to a third party. In reality, there are a number of other exit-planning options: • Gift or sale to one or more family members • Sale to current business partners or management team • Sale to an employee stock ownership plan (ESOP) • Outright sale of business to a third party • Sale of minority equity interest • Sale of majority equity interest • Dividend recapitalization • Orderly liquidation. To make things even more interesting, there's an almost unlimited number of different variations of each of the above. Each of these offers its own benefits but also presents its own challenges. As was stated, the one-size-fits-all approach never works. One business may be a perfect candidate for an ESOP while another is a terrible ESOP alternative. The key here is that you can't really know which strategy works for you until you get educated about what your options are. A team of qualified professional advisors can help you identify what's right for you. Speaking of which . . . 5.) Succession planning is a team sport Succession planning is a uniquely complicated process. Creating and implementing a succession plan requires ex- pertise in many different disciplines including business, law, accounting, finance, valuation, taxes, estate planning, family dynamics, and personal coaching. You need the right team to help guide you through the process. Depending on your specific situation, you may need an accountant, investment banker, business banker, financial advisor, valuation professional, business attorney, estate plan- ning attorney, and family counselor. And each of these people must have specific expertise in helping guide business owners like you through the succes- sion process. Sometimes that means your current advisors may not be best suited to help you. Start by finding one trusted advisor and ask them to help you assemble the right team. Then, make sure that the team is empowered and encouraged to work together and share infor- mation collaboratively. There's no room for silos on the exit planning team. Finally, hold your team accountable for keeping things moving, and encourage them to keep you accountable, too. Momentum is important; once the planning process begins, we want to minimize roadblocks and distractions that prevent the plan from being executed. 6.) The best day to start succession planning is today Your business wasn't built in a day. Your succession plan won't be completed in a day either. But one bad day (i.e., your untimely death) combined with a failure to plan could mean instantaneous disaster for your business and financial ruin for your family. So, why wouldn't you do everything you can to protect your business for now and into the future? Start the planning today! Is succession planning complicated? Yes. Does it take a lot of time and effort? Yes. Is there anything more important than planning for the future of your business and family? Well, the answer to that question is up to you. 26 n November 2022 WWJ waterwelljournal.com SUCCESSION PLANNING 101 from page 25 WWJ Eric Duffee is an attorney at Kegler Brown Hill & Ritter in Columbus, Ohio. He serves as outside general counsel to a number of private businesses and his practice focuses on nearly all the needs a business will have throughout its lifecycle, from startup and formation through capital raising and exit planning, including M+A, corporate finance, intellectual prop- erty, and succession planning. He can be reached at eduffee@ keglerbrown.com. Learn More To read more about succession planning, visit Water Well Journal at waterwelljournal.com/?s=succession+planning. Get Business Resources from NGWA The National Ground Water Association's online bookstore has business tools to help you in your job. Available are sample con- tracts, cost calculators designed to help you know the cost of doing business, best suggested practices, white papers, and more. Visit the bookstore at www.NGWA.org/Bookstore.

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