Building a Legacy: How Strategic Planning Helps a Family-Owned Construction Business Transition to the Next Generation.
Overview
Through the use of strategic succession planning, Wesolowski Law Group guided the owners of a family-owned construction business through the process of transitioning their business to one of their children, while being mindful of treating all their children fairly. After executing the succession plan, a child who was heavily involved in the business now runs the business, while easing his parents’ transition into retirement.
Challenge
Mom and Dad owned and operated a construction company for 30+ years. With a successful business built on craftsmanship, hard work, and exceptional customer service, Mom and Dad spent their off-hours raising their four children. One Son showed a particular interest in the business, working side-by-side with Dad, while their other children pursued different careers. When Mom and Dad approached retirement age, they hoped to pass the business on to their Son in a way that provided both for their retirement and treated all their children fairly.
Solution
Coordinating with a CPA and the family’s other financial advisors, Wesolowski Law Group undertook a thorough review and valuation of Mom and Dad’s business along with Mom and Dad’s retirement needs. Upon further analysis, we scrutinized and determined which parts of the business were central to operations versus which assets could be spun off as passive investments. In this case, we noticed that Mom and Dad owned the building from which the business ran. Learning this was key to developing a successful succession plan: Son purchased the core, operational parts of the business, partly with cash down, partly through a Note held by Mom and Dad. From here, Mom and Dad agreed to continue ownership of the office building, positioning the Son’s business to transition into a rent-paying tenant.
Impact
Mom and Dad successfully transitioned the business to their Son. Having only bought the operational assets needed to run the business, the Son was able to buy into the business at a fair and affordable price. By acting as Son’s bank, Mom and Dad are now in a position to monitor Son’s progress and provide support, if needed. The stream of payments made by Son on the Note, and rental payments, provide for Mom and Dad’s retirement. Meanwhile, because Son purchased the business for a fair price, Son’s siblings are no worse off. When Mom and Dad eventually pass (hopefully, not for a very long time!), all four children will equally inherit the building and any payments still owed by Son for the business.
The Shop Around the Corner: Strategic Restructuring Protects a Retail Store while Positioning it for the Next Generation.
Overview
After 30 years of owning her own retail business, an entrepreneurial woman turned to Wesolowski Law Group to mitigate her risks. By developing a corporate structure and combining it with planning tailored to the Client’s personal circumstances, we insulated the Client’s business from liability and potential health-related risks. We also set the stage for the Client to transition her business to her daughter.
Challenge
Our Client owns a retail shop in the heart of the Village. She started with a small storefront, but relocated to (and eventually bought) a larger building in the Village as her business expanded. Not knowing how far the business would go, and not working with an attorney, the Client opened the business as a sole proprietorship. The Client was concerned about liability risks related to the business, and with health concerns looming, she wanted to protect the business from risks relating to unforeseen medical events. Ultimately, the Client’s hope was to protect the business from these combined risks until it transitioned to her Daughter, who was active in the business.
Solution
Coordinating with a team of advisors, we sat down with our Client and her family; we listened to their story and their vision for the future. As a first step, we formed a limited liability company to shield the business owner from personal liability through the business. Next, we rolled the limited liability company into a trust, protecting the value of the business against the Client’s potential future medical expenses. Meanwhile, our conversation firmed up plans for Daughter to take on a larger role in the business, with the intention that she will lead it into the next generation.
Impact
Transitioning the business into a limited liability company served a few functions. If something goes wrong in the business, the new business entity shields the owner from personal liability and the owner’s personal assets are no longer at risk from a business downturn or a slip-and-fall. The limited liability company also extended the business beyond the owner: the business’s accounts will not freeze should the owner experience a health event, and the business can continue in the owner’s absence. Combining the limited liability company with the trust, we limited the extent to which the business’s value can be taken away if owner’s medical needs increase. Daughter, more vested in the business than before, looks forward to building on the strong foundation our Client built.
Moving to Main Street: A Retail Business Relocates in Search of New Customers.
Overview
Wesolowski Law Group advised the new owner of a retail business on the relocation of his storefront. Through developing a corporate structure and assisting the Client through lease negotiations, we helped the business establish itself in a growing community.
Challenge
We met our Client as he was taking over a boutique retail business on the outskirts of town. Our Client saw the potential to grow the business, but he knew that the business had to relocate in order to turn his vision into reality. Moving and growing the business involved a series of challenges, from firming up his corporate structure to finding a new location and landlord. Our Client needed to protect himself from personal liability in the event that something went wrong in the business. Our Client was also seeking advice on leasing a storefront for his business.
Solution
We understood from the start that a business desiring a Main Street storefront could face Main Street legal issues. We worked closely with the Client to form a limited liability company, recognizing that a corporate structure was needed to protect the Client from potential personal liability. After establishing the limited liability company, we reviewed and commented on the lease proposed by the business’s prospective landlord. We walked the Client through the meaning of key provisions in the lease and guided the Client through negotiations for the storefront he desired.
Impact
After much hard work, our Client’s dreams turned into reality. With his business fully structured, our Client signed a lease to move his business to a storefront on one of the Village’s busiest streets. Increased visibility has resulted in more traffic to the shop, and our Client has leveraged greater recognition to expand his offerings, both on the retail side and in related premium services. Meanwhile, our Client extended his roots, becoming one of the pillars of the community.
Getting to “Yes”: An Informed Negotiation Strategy Helps a Business Services Company Weather the Storm.
Overview
A business services company was on the verge of closing as a result of a slide in sales. Wesolowski Law Group examined the business’s cost structure, identified a need to renegotiate with a critical vendor, and counseled the business through negotiations with the vendor.
Challenge
Our Client, a business services company, was struggling. Sales had plateaued as a result of economic trends, and the company had fallen behind on its payments to a key vendor. Ownership couldn’t justify keeping the company open under its current cost structure. The Client asked us about its options, while also dealing with differences of opinion in the boardroom.
Solution
We started our work in the boardroom, meeting the owners and getting a feel for the company’s ownership dynamics. We worked through differences of opinion by focusing on certain priorities shared by all of ownership. Then, we talked the owners through a variety of scenarios, ranging from the rosiest of outcomes to the grimmest of corporate doomsday possibilities. In reviewing the Client’s cost structure, it became evident that obligations to one critical vendor were at the heart of the Client’s cash crunch. We guided our Client through negotiations with the key vendor, counselling the Client on the implications and consequences of each offer and counteroffer.
Impact
Through our counselling, the Client’s ownership understood that the consequences of not reaching a deal were worse for the vendor than for the Client. Knowing this, the Client held firm on its position in negotiations and forced the vendor to offer a better deal. The Client ultimately reached a deal with its vendor that reshaped the Client’s cost structure and improved cash flow. The increased cash flow helped the company weather the economic storm and repositioned it for the eventual economic rebound.
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