Business Succession Planning for Metro Detroit Owners

Succession planning is the deliberate transfer of ownership and leadership to the next owner, whether a family member, a key employee group or an outside buyer. Unlike a sudden sale, it is a process with a timeline, and it usually includes the current owner's continued involvement during a transition period so customers, employees and lenders see continuity.

The plan covers more than the ownership transfer: who runs the business day to day, how decisions are made, how the owner's departure affects customer and supplier relationships, and what happens if the owner is disabled before the transition. The governance questions are as important as the financial ones.

The transfer structure depends on what the business is worth and what the successor can afford. A family transfer may use gifting or installment structures over time; a key-employee buyout may use a gradual ownership path funded from business earnings; an outside sale is typically a single transaction at a negotiated price. IRS Revenue Ruling 59-60 lists the classic valuation factors, including the nature and history of the business, earnings capacity and the market prices of similar businesses.

Real estate is often part of the picture. Metro Detroit businesses frequently own their buildings, and how the real estate is held, inside or outside the operating company, affects both the valuation and the tax structure of the transfer. The operating business and the building can be transferred on different timetables and to different parties.

The federal estate and gift exemption is $15 million per individual for 2026, indexed for inflation, which shapes how much can pass without federal gift or estate tax, though state rules and the owner's specific circumstances always need confirmation. On the income side, the transfer structure determines how the successor pays for the business and how the owner is taxed on the proceeds, and Michigan's own business taxes, including the 6 percent corporate income tax and the sales and use tax, can enter the picture depending on the entity and the assets involved.

Because the pieces interact, the tax plan should be modeled before the transfer documents are drafted. A structure that minimizes one tax can increase another, and the right answer depends on the family's goals, the business's facts and current law, so it should be reviewed with an advisor rather than assumed.

Five years is a practical planning horizon for most transitions, and longer for a family succession. That window allows time to develop the successor, document systems, reduce owner dependence and make the business affordable for the next owner, all of which raise the odds the transition succeeds.

Pagac's case study of a founder who exited on his own terms, without selling, shows how long the timeline can run: a succession structure developed over more than twenty years and two leadership transitions. From its Bloomfield Hills office, Pagac & Company has served business owners since 1975, and succession work across Oakland County, Metro Detroit and Southeast Michigan is built on that kind of long-horizon planning.