Keep It In the Family
Steps to take to ensure smooth succession of a family-owned construction business without overburdening the next generation.
5. You will need both an accountant and attorney who understand the industry and related financial transactions. Your local associations should produce some candidates in this regard.
This transaction will make your bank very nervous. Try not to scare them with payout amounts that are unreasonable.
Cash flow is king
This whole transaction centers on cash flow, cash flow and cash flow. Both parent and child have to understand how it is generated and what they have available for payments to the parent. Having this understanding ensures that both sides will come to a reasonable understanding working with what is available.
As you can tell, this is a complicated topic. You can make a transaction like this work if you have the cash flow to support it, and there are limits on how the company uses discretionary cash. But without understanding the accounting and business issues, success is unlikely. So if you need help, let me know. ET
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