Business Succession should be a forethought not an afterthought

"The future belongs to those who believe in the beauty of their dreams"

Elanor Roosevelt

Having spent many years creating and developing a successful business, there may come a time when you want to think about taking a step back and handing the baton on to others. For some this may mean reducing their hours and perhaps passing on or selling some shares. For others a full retirement will be preferable.

Many learned articles have been written about the tax implications of succession planning. At Friend Partnership we know that Strategy for passing on a business or part of a business should never be driven purely by tax considerations. These decisions are about the future of something valuable that you have created; something that you have invested much time and effort into. They are about your own future and the future of your family.

Business Succession should be a forethought not an afterthought

The most critical decision will be who to pass the business on to. If the next generation is willing and able to take the company forward that decision should be straightforward, although careful thought and consideration ahead of time will make the transition of control a smooth one. On the other hand, if passing the business on to family members is not an option you could consider passing it on to existing management or employees and there are several alternatives that can be highly advantageous to you in this scenario. For some, an outright sale of the company may be the best option, in this scenario careful planning and preparation beforehand can reap rewards when the time comes.

If you are transferring or selling shares to the next generation or selling them to employees, you have the option to retain an income stream and a continued say in the running of the company by continuing as a director and/or by retaining some shares. You will need to give thought to how much to retain and whether you will want to pass on more shares and control gradually depending on the continued success of the company.

The key message we are trying to make are forethought and careful planning now, will allow you to put in place the building blocks to make this happen in the most efficient way. This preparation in the hands of an organisation that will strive to understand your business, who will advise and walk with you every step of the way, will result in a smooth and tax efficient transition for you and your family.