The Succession Accord:®

Enhancing the chances for transfer success

The Succession Accord® is a tool which helps business owners achieve harmony in their family and harmony in their business so that when the key shareholder leaves the stage at death the value of the enterprise is protected and the family members are prepared for their stewardship role as owners.

The Succession Accord®, the Family Business Accord®, and the Family Accord®  have been developed to go beyond the traditional method of succession and estate planning for family enterprises which tends to focus exclusively on life insurance, saving income taxes, creditor protection and trust planning to at least an equal focus on creating harmony in the family and the family enterprise. 

The two primary problems triggerred by the death of the key shareholder are a potential liquidity crisis and a harmony crisis.

Liquidity:the deemed dispostion of the shares of the family enterprise creates a capital gains income tax liabilty and other estate costs which must be paid before the residue of the owner's estate is distributed creating an immediate need for cash or liquidity problem.  The liquidity problem can be solved by life insurance on the owner. This strategy is  generally accepted by business families and their professional advisors as the most economical way to fund the income tax or estate liability either on a single life or joint last to die basis. The life insurance is useful to provide cash to equalize calims amongst family stakeholders and to buy out family members who wish to have cash rather than shares.

Harmony: Disharmony is created when the family stakeholders perceive they have been dealt with unfairly compared to other family stakeholders. When this occurs it is usually because the owner drafted the succession and estate plan with professional financial and business advisors exclusively in isolation of family members.  The best practices of the most successful multi-generational business families in the world do the opposite. They create a vision  for the business and the family first and have the tax, legal and insurance experts execute the legal documents to align with the vision.  These business families also set up a governance structure to communicate the vision of the succession and estate plan so that when the owner and leader dies the family stakeholders understand and have prepared for their roles to continue this vision. This is accomplished by creating a family agreement which is a non-legal document  that has been rehearsed many times with the family and the key professional advisors so that business and family continuity is maintained for many generations .