Companies, Partnerships and Directors
Succession planning for business owners
Family business owners should think ahead in order to plan an exit strategy that will benefit not only those leaving the business but also those driving the business forward. Many business owners find it hard to let go. The complications inherent in a family business can present further barriers to successful succession planning.
As a family business owner it is vital that you plan an effective strategy to ensure that your exit from the business and the subsequent handover to the next generation is as smooth as possible. You will need to think about this some years in advance of the actual date you plan to leave. This will give you time to identify which individuals are suited to which roles and allow you to bring those persons into management positions.
You should review the constitutional documents of your business to ensure that your plans are capable of being implemented. At the time of your exit, you do not want to find that you are restricted by the articles of your company or partnership agreement as to whom you can transfer your interest to. It may be that you also need to consider changing the structure of your business (e.g. incorporating into a limited company) to make it easier to transfer or create new interests in the business for other family members. You should consider drafting shareholder or partnership agreements if you do not already have them in place to record what your plans for the future are.
When succession planning you will also need to consider the financial and tax implications. Is transferring the business to a family member the best option for you financially? You may also find that tax liabilities arise on retirement or on the death of a business owner and so advance tax planning, particularly in respect of inheritance tax, could prevent significant liability.
Finding a solution
Using a professional third party to put forward the best options for your business could provide the long term solution you are looking for. We have a Business Services Department with the expertise to assist you.