Business Succession Planning Attorney & CPA — Orland/Tinley Park, Illinois
Every privately held business eventually faces a transition — retirement, sale, death, or disability. The question is whether that transition was planned or forced.
As an Attorney and Certified Public Accountant serving Orland Park, Tinley Park, Orland Hills, Mokena, and the broader Chicago southwest suburbs, Paul Lechner provides integrated business succession planning that addresses both the legal transfer of ownership and the tax consequences of that transfer — at the same time, under one roof.
Most business owners spend decades building a company but very little time planning what happens when they step away. Without a succession plan, the business you built may lose significant value — or may not survive the transition at all.
Schedule a Consultation Call (708) 460-6686
What Business Succession Planning Covers
Buy-Sell Agreements
A properly drafted buy-sell agreement controls what happens to a business interest when an owner dies, becomes disabled, divorces, retires, or simply wants to exit. Without one, a departing owner — or their estate — may have the right to force a sale or bring in an unwanted partner. We draft and review buy-sell agreements structured as cross-purchase agreements, entity redemption agreements, or hybrid arrangements, and coordinate the funding mechanism (typically life or disability insurance) with the legal documents.
Family Business Transitions
Transferring a business to the next generation involves more than naming a successor. It requires structuring the transfer to minimize gift and estate taxes, addressing the fair treatment of heirs who are not involved in the business, protecting the business from future creditors or divorcing spouses of the next generation, and establishing governance structures that keep the business running smoothly during and after the transition. We coordinate family business transitions with your estate plan to ensure consistency across all documents.
Sale to a Third Party or Key Employee
When the succession plan involves selling to an outside buyer or to a key employee or management team, the planning involves business valuation, deal structure (asset vs. stock sale), installment sale planning, earnout arrangements, and tax-efficient deal design. As both an attorney and CPA, Paul Lechner can analyze the after-tax economics of competing deal structures — not just the headline price — and document the transaction from letter of intent through closing.
Key Executive and Key Person Planning
Many closely held businesses depend on one or two key individuals. Protecting the business against the loss of a key person requires life and disability insurance structures, non-compete and non-solicitation agreements, deferred compensation arrangements that create golden handcuffs, and contingency plans that preserve business value during a leadership transition.
Employee Stock Ownership Plans (ESOPs)
An ESOP allows a business owner to sell all or part of the company to employees through a tax-advantaged structure. For the selling owner, an ESOP sale to a C-corporation can defer capital gains tax under IRC Section 1042 if proceeds are reinvested in qualified replacement property. For the business, ESOP contributions are tax-deductible. ESOPs work best for businesses with strong cash flow, a stable workforce, and an owner interested in a gradual transition while preserving the company culture.
Entity Structure Review
The right entity structure for operating a business is not always the right structure for transferring it. A succession plan often reveals the need to restructure from a C-corporation to an S-corporation, convert to an LLC, or create a holding company and operating company structure that separates asset protection from business operations. These restructurings have significant tax consequences that must be modeled before implementation.
Why Work With an Attorney Who Is Also a CPA?
Business succession is one of the few areas where legal and tax planning are completely intertwined — and where a mistake on either side of that equation can cost an owner far more than the cost of planning. A purely legal advisor may draft documents that are legally correct but tax-inefficient. A purely financial advisor can model scenarios but cannot draft the documents or represent you in a dispute.
Paul Lechner holds a Juris Doctor, a Master of Laws in Taxation (LL.M.), and is a licensed Certified Public Accountant. He has served in senior financial and legal roles at KPMG LLP, GE Capital, CIT, and Trinity Industries. He brings a transaction-level understanding of business valuation, deal structure, and tax-efficient ownership transfer that most local advisors cannot match.
The best time to create a succession plan is before you need one. Most owners who wait until a health event, a potential buyer, or a family dispute forces the issue end up with fewer options and worse outcomes. Contact us to begin the conversation.
Related Services
Business succession planning connects closely with several other practice areas we serve:
- Estate Planning — coordinating business interests with wills, trusts, and beneficiary designations
- Corporate Law — entity formation, governance documents, and ongoing corporate maintenance
- Tax Planning — entity structure, capital gains planning, and retirement plan design for business owners
- Financial Diligence — business valuation and transaction diligence for buyers and sellers
For more information contact Paul Lechner, Esq., CPA at (708) 460-6686 or schedule a consultation online.
Frequently Asked Questions
When should I start business succession planning in Illinois?
The right answer is earlier than most owners think. A succession plan that is executed five to ten years before a planned transition gives an owner the most options: time to maximize business value, restructure ownership tax-efficiently, groom successors, and coordinate with the estate plan. Owners who begin planning at the point of a health crisis, a forced sale, or a family dispute find that many of the best strategies are no longer available — and that the tax and legal costs of an unplanned transition can be severe.
What is the difference between a cross-purchase and a redemption buy-sell agreement?
In a cross-purchase agreement, the remaining owners purchase the departing owner’s interest directly. In a redemption agreement, the business entity buys back the interest. Each has different income tax, estate tax, and insurance cost implications. For example, in a cross-purchase arrangement, the surviving owners receive a stepped-up basis in the purchased interest — which reduces capital gains tax when they eventually sell. In a redemption arrangement, the entity holds the insurance and there is no basis step-up. For businesses with more than two or three owners, a hybrid arrangement or a trusteed buy-sell may be more practical. The right structure depends on the number of owners, the relative values of their interests, and their individual tax situations.
How is an ESOP taxed in Illinois?
An Employee Stock Ownership Plan (ESOP) allows a business owner to sell stock to a trust that holds shares for the benefit of employees. For a C-corporation, a selling owner who reinvests the proceeds in qualified replacement property (QRP) under IRC Section 1042 can defer capital gains tax indefinitely. Illinois conforms to federal treatment for most ESOP purposes. The business can deduct ESOP contributions used to repay the acquisition loan, making the principal payments effectively tax-deductible. For the right business — consistent cash flow, a motivated workforce, an owner interested in a gradual transition — an ESOP can be one of the most tax-efficient exit strategies available.
What is a Grantor Retained Annuity Trust (GRAT) and how does it help with business succession?
A GRAT is an irrevocable trust through which the grantor transfers assets — often business interests — while retaining the right to receive an annuity payment for a fixed term. If the assets grow faster than the IRS’s assumed rate of return (the Section 7520 rate), the excess growth passes to the trust beneficiaries (typically children) with little or no gift tax. For business owners with closely held stock or LLC interests that are expected to appreciate, a GRAT can transfer substantial future value to the next generation at a minimal transfer tax cost. The main risk is that if the grantor dies during the trust term, the assets are pulled back into the estate.
Does succession planning require changing my estate plan?
Almost always. A business interest is often the largest asset in an owner’s estate, and how it is treated in the estate plan determines both business continuity and family equity. Business interests that pass outright to heirs who are not involved in the business can create governance problems. Interests that are split among multiple children without a buy-sell mechanism can trigger disputes. And estate plans that were drafted before the succession plan was developed may conflict with the succession plan’s ownership structure. We review and update estate plan documents as part of every succession engagement to ensure consistency across all legal instruments.