How One CEO Passed Down His Empire Without Family Drama or Tax Nightmares
Tom built his manufacturing company from nothing. Thirty years later, he had 150 employees, three locations, and a business worth $12 million. But he almost lost it all because of one conversation with his accountant.
“Your kids will owe about $3.2 million in taxes when you die,” his CPA told him. “And they’ll have nine months to pay it.”
Tom’s face went white. His children didn’t have that kind of money lying around. They’d have to sell the business just to pay the government.
That’s when Tom learned what thousands of business owners discover too late: building a successful company is only half the battle. Getting it to the next generation without destroying it? That’s where most families fail.
Why Most Succession Plans Fall Apart
Here’s what Tom didn’t know (and what most business owners miss): business succession planning isn’t just about writing a will. It’s about creating a roadmap that protects your company, your family, and your legacy.
The statistics are brutal. According to family business research, only 30% of companies survive to the second generation. Just 12% make it to the third. The main culprits? Family conflicts, tax bills, and poor planning.
Tom’s story could have ended there. Instead, he did something innovative. He called The Greg Hall Law Firm and started building a real succession plan.
The Three Things That Actually Matter
After working with hundreds of business owners in Prosper and across Texas, we’ve seen what works and what doesn’t. Effective business succession planning comes down to three core elements:
Timing and Control: You need to decide when to step back and how much control to keep. Some owners want to hand over everything at once. Others prefer a gradual transition over several years. There’s no correct answer, but you need to be clear about your timeline.
Tax Strategy: This is where most families get hammered. Without proper planning, your heirs could face massive tax bills that force them to sell the business. But with the right structures in place, you can legally minimize these taxes significantly.
Family Dynamics: Maybe your oldest child wants to take over the business but lacks experience. Maybe your most capable child has zero interest in taking over. These conversations are complex, but they’re essential. We’ve seen too many families torn apart because nobody talked about expectations up front.
Thinking about this for your situation? Let’s talk. We’ll walk you through your options—no pressure.
What Tom Did (And How It Saved His Family)
Tom’s solution involved several moving pieces. First, we set up a family limited partnership that allowed him to transfer ownership gradually while retaining control. This significantly reduced the taxable value of future transfers.
Next, we created a buy-sell agreement with life insurance funding. If Tom died unexpectedly, the insurance would provide cash to pay taxes and buy out family members who didn’t want to stay involved.
But the smartest thing Tom did? He started training his daughter, Sarah, to run the company while he was still around. She worked in every department for two years, learning the business from the ground up.
Today, Sarah runs day-to-day operations while Tom focuses on strategic planning. The transition happened smoothly because everyone knew their role. And when Tom eventually steps down completely, the tax impact will be minimal.
Common Mistakes That Cost Families Everything
We’ve seen business owners repeat the same errors. Here are the big ones to avoid:
Waiting too long: “I’ll handle this next year” becomes “I’ll handle this when I retire” becomes “I’ll handle this when I’m sick.” By then, your options are limited and expensive.
Assuming your kids want the business: Just because they grew up around it doesn’t mean they want to run it. Have honest conversations early.
Ignoring non-family employees: Your key managers need to know what’s happening. Uncertainty makes good people leave.
Forgetting about your spouse: Business succession planning affects the whole family. Make sure your retirement plans align with the transition timeline.
Start Your Plan Today
Business succession planning isn’t something you can handle with generic forms or basic wills. Every situation is different, and the stakes are too high for cookie-cutter solutions.
Tom’s story had a happy ending because he acted while he had time and options. Don’t wait until you’re facing a health crisis or family emergency to start planning.
Ready to protect what you’ve built? Contact us today for straight answers and real solutions. We’ll help you create a succession plan that works for your family and your business.