Your Family Business and Succession Planning
Released On 30th Dec 2023
Family businesses are often the backbone of the UK economy, but ensuring their continuity requires careful succession planning. It isn't just about choosing the next leader: it's a complex process that integrates legal, financial, and personal considerations.
This is our basic roadmap:
1. Start Early: don't wait until a crisis or looming retirement. Start the conversation early, involving all family members who have a stake in the business. Encourage open and honest discussions about roles, responsibilities, and the future vision.
2. Identify the Right Successor(s): identify a successor who is not only capable but also committed to the business's long-term success. Consider skills, experience, and alignment with the company's values and culture. Will the successor be internal, or will external recruitment be required?
3. Consult Legal and Accounting/Tax Experts: to ensure that your succession plan aligns with the law and maximises your business’s interests. Family businesses can have complex structures, and it is essential to address matters such as corporate structure, shareholdings, Wills and tax implications.
4. Charitable options: if there is no obvious successor then you may wish to consider setting up a charitable incorporated organisation and you should consult your lawyers and tax advisers early on if this is your chosen route.
5. Draft a Will: a well-drafted Will is vital for passing down ownership shares of the business. Ensure your Will clearly states your intentions regarding the distribution of assets, including the family business.
6. Create a Shareholders' Agreement: a shareholders' agreement can help regulate the management of the business and outline the rights and responsibilities of all shareholders. It can also address issues like the sale of shares, dispute resolution and provisions for exiting the business.
7. Develop a Business Continuity Plan: dealing with how the business will operate in the event of unforeseen circumstances, such as the death or incapacity of key personnel. It may also include insurance and funding strategies to ensure the business's ongoing viability.
8. Communication and Training: preparing the next generation for leadership roles is crucial. Providing training and mentorship can help the successor gain the necessary skills and knowledge to take over the business effectively.
Securing the future of your family business through succession planning is an investment. By starting early, involving all stakeholders, and seeking legal expertise, you can affect a smooth transition, the continuation of your legacy and your contribution to the economy.
For more information, please contact either Katherine Gilmour katherine.gilmour@battens.co.uk 01935 846059 or Brian Levine brian.levine@battens.co.uk 01935 846258 in our company commercial team.
For more information on creating or amending a Will please contact Naomi Dyer on naomi.dyer@battens.co.uk 01935 811307
