1. Succession Planning
Gary N Cooper CPA PC and Forward Results, LLC
www.garycoopercpa.com

2. Succession Planning
•Business point guard.
•Understanding of processes and procedures
within the business.
•Understanding of clients human resources.
•Understanding of financial position.
•Understanding of results of operations.
•Understanding of cash flow issues.
•Understanding of company capitalization or
lack of.
•Overall market, industry and economic issues.

3. Succession Planning
Analysis of Market and Industry
• Does your client have a succession plan?
• Is it in writing
• How defined is the plan?
• Are they in a market with potential buyers?
• Options for succession:
• Family members
• Employees
• Third party.

4. Succession Planning
Organization of Financial Data:
Balance sheet cleanup
Understanding of inventory levels
Accounts receivable - collectable
Fixed assets - detail/market value
Do all of the above compare and agree
with the underlying supporting
documentation?

5. Succession Planning
Capitalization
Is the business well capitalized?
 Have they used short-term money to
purchase long assets?
Is this a good opportunity to
recapitalize the company with long-term
debt?
Do they have minority shareholders or
partners that need to be bought out?

6. Succession Planning
Income Statement
Need for business segments?
Classes if QuickBooks.
Potential need for multiple entity structures
or separation strategies.
Common size analysis
Year-to-yearcomparatives
Industry comparatives
Revenue recognition defined and
corrected for future growth.
Percentage of completion
Accrual / cash.

7. Succession Planning
Entity Structure
Double taxation
C- Corporation
Minority shareholders
Take out before transaction
Built in gate analysis
Conversion to S-Corporation
Separation of hot assets.
Building
Equipment

8. Succession Planning
M&A (mergers and acquisition)
 Does the detail underlying documentation
compare and agree to amounts reported on
the financial statements.
The importance of non-financial data.
MD&A
Forecast to actual
Operating data
Month-to-month analysis.
Balance Sheet and Income Statement
Forecast to actual analysis.
Source document build up for total support

9. Succession Planning
Financial audit
 The value of having a financial audit
to increase the market place of
potential purchasers.
 Reduces the amount of due diligence
that will be performed by the
purchaser.
 Creates creditability with all financial
data.
 Third party support for amounts
reflected in the financial data.

10. Succession Planning
Taxes
Double taxation.
Current filings are correct.
General ledger compares to tax
returns.
How aggressive has your client been
in deducting personal expenses?
M1 analysis book to tax differences.
Are they adhering to current tax laws?

11. Succession Planning
Tax Ramifications – the transaction
Asset allocation.
Total recognition or installment sale.
Computing basis.
Short tax year.
Asset versus stock purchase
Comparing deprecation, recapture,
and the asset allocation's number of
years of depreciation versus good
will. PV analysis on savings.

12. Succession Planning
Conclusion
 Would you consider using a team of
professionals to assist you with your clients
succession needs?
Succession planning could last up to 10 years so
the team of professionals could assist with
increasing client cash flow by implementing
processes and procedures in all aspects of the
clients business.
Questions or comments?

13. Succession Planning
Conclusion
 Have you ever discussed succession planning
with your client?
How close are you to your clients financial
records.
Do you have regular meetings with your client to
discuss their financial position and results of
operations?
Do you have a clear picture of their goals and
objectives?
Do they understand the value of their business
with our without their involvement?

14. Gary N. Cooper CPA PC
1703 W. 12st Street
Houston, TX 77008
713-243-8590
www.garycoopercpa.com
www.forwardresults.com