Separation of ownership and work when succession planning

I recently read a book by Robert Galbraith. He writes about Comoran Strike, a private investigator.  Except he is a she.  Robert Galbraith is a pseudonym for J.K. Rowling of Harry Potter fame.

So what does this have to do with business succession and Employee Stock Ownership Plans (ESOPs)? A great deal actually.

If you have followed my blog you know that I love the Harry Potter franchise. I think J.K. Rowling is an excellent author and was saddened when the series ended.  She has a passion for writing but it would be difficult for her to separate herself from her Harry Potter past.  So enter, Robert Galbraith.

Business owners often find themselves in a similar position. They wear many hats; owner, chief executive, and jack-of-all trades to name just a few.  They often think if they want to exit one of those positions they have to exit them all.  This is particularly pronounced if the position they want to exit is owner.  They often feel that they have to leave the business entirely.

But many times the owner may want to liquidate their ownership interest and continue to be engaged in the business. Selling all or a portion of the company to an ESOP often allows the seller to continue in the same position as before the sale. This allows them to create both a liquidity event and stay involved.  The selling owner finds that they can plan for the succession of ownership and succession of work separately.  And unlike Rowling, there is no need to change their name.

Want to learn more? Stay tuned for future blogs addressing additional business owner challenges and why ESOPs should be considered in succession planning.

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Follow @twitter 

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This document is intended to be educational in nature and is not intended to be taken as a recommendation.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

t170515076k – 5/2017