The restructuring of sole proprietorship to diversify business risk and prepare family business succession

A Client who produces and distributes plastic products as a sole proprietor asked for our advice on the restructuring of his business. The Client wanted to diversify the risk associated with his operations and build a structure that would allow him to bring his children into the business. In order to mitigate business risk, our team separated from the business all real estate, which remained with the Client as the most valuable assets. Other business assets were transferred to a newly-formed limited partnership with another newly-formed company serving as its general partner and the Client and his children as limited partners (whose liability is limited). This business structure allowed the Client to limit his personal liability, create a separate entity for real estate management and ensure business succession by having his children join the new limited partnership.