Family dynamics are complicated. When incorporating a business into that dynamic, the complexity is amplified.
When we talk about exit strategies with owners of middle market aerospace and defense companies, one of the first questions we ask is “do you have family in line who can take over the business someday?” PwC’s 2023 Family Business Survey(1) found that 72% of family business owners would prefer that their business stay in their family.
If you have family members in line to take over your business someday, and they are both capable and motivated to do so, then we recommend you work closely with your legal counsel, well in advance of a transition, to ensure optimal estate tax planning and optimal corporate governance. It takes time to put in place estate plans and create liquidity in a manner that is tax efficient and not harmful to the business (such as excessive leverage). Plus, it takes time to put in place new governance structures, such as advisory boards, to aid and guide younger family members as they rise in management control and authority.
Transitioning your business to the next generation can be a terrific exit strategy for the business founder/owner. To be done well, it takes time, planning, and expert guidance from trusted legal counsel with deep knowledge in estate planning for business owners.
Have a great day everyone,
Ryan Kirby
Junior Partner
