Planning For Business Owners

Helping business owners and their families

Mrs. Rudolph (age 52) and Mrs. Martin (age 55) were joint business owners of a successful IT consulting firm. They had started their business from scratch more than 20 years ago, and by the time we met with them, it had grown to service more than 150 clients and employ three other individuals. Their company was structured as an LLC, and the current plan was to buy each other out when the other decided to retire. Additionally, if one of the owners died, the surviving spouse would inherit half the business.

Their families were close enough that they felt comfortable with this agreement. They had been extremely pleased with the work of their employees and wanted to find ways to encourage them to stay for the long term. Retirement was on the horizon for Mrs. Martin within the next five to seven years since she was about to welcome a third grandchild into the world. However, Mrs. Rudolph and Mrs. Martin had not taken the time to sit down with an advisor to talk specifically about their business succession plan. They were given the recommendation by Mrs. Rudolph’s brother (a client of ours) to have a meeting with us to make sure their goals for the business were being met.

Our Approach

  • In our initial meeting with Mrs. Rudolph and Mrs. Martin, we had an in-depth conversation about the goals and needs of their successful and growing business. We found that the only step taken was a valuation of the business, which is approximately $1.5 million, and an informal buy-sell agreement.
  • Further into the conversation, we discovered that the owners never felt the need to have a formal plan in place when the other owner passed or retired until we approached the discussion with various scenarios. Though we understood that the two families were close, we turned our focus on protecting the business, employees, and clients, which is their most important priority.
  • We discovered that no insurance policies were in place to finance the buy-sell agreement, and the LLC agreement had no provision outlining the possibility of an owner’s full disability or divorce.
  • Furthermore, we found that the long-term retention of their employees was equally important, but the firm had no retirement plan or plan to educate new hires if one were to leave.

The Solution

  • Using the above information, we created an Action Plan to address the immediate issues of the business: the lack of insurance funding for the buy-sell agreement, provisions to cover full disability and/or divorce of an owner, and the long-term retention of their employees.
  • We helped the clients purchase individual life insurance policies on each other to fund the buy-sell agreement.
  • We arranged a meeting with an attorney and the two business owners to update their existing LLC agreement to include provisions for disability and divorce.
  • We helped install a retirement plan that we would manage and monitor for each of their employees which would be funded through both employer and employee contributions.


  • Following the agreed-upon Action Plan and working together to complete each task, Mrs. Rudolph and Mrs. Martin felt more than satisfied that their business needs were met.
  • Both business agreements were funded and executed appropriately to meet their wishes.
  • The employees were satisfied with the retirement plan that was implemented.
  • We offered individual financial planning for the business owners so that their personal financial goals were working cohesively with their business planning needs.
  • We continue to meet on an ongoing basis with each of them together and separately to update their financial situations and discuss any needs/goals that may change.

The preceding case study is for illustrative purposes only and may not be representative of the experience of other clients. Actual performance and results will vary. This case study does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted regarding your specific situation.

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