Succession: your options
For family business owners the idea of handing over the reins can be a daunting prospect. But what are the options?
Sale to a third party
Key to attracting third party purchasers and maximising price is to prepare your business for sale at an early stage. Your arrangements (whether with employees, suppliers or customers) need to be properly documented, intellectual property registered, statutory registers up to date etc. Putting in the work now will avoid having to address issues in the midst of a busy sale – and potentially avoid price chips.
Passing the business to the next generation
It’s important to consider the transaction structure which may involve a gift of shares or setting up a family trust - and the tax implications. The governance structure after the buyout also requires careful thought, particularly when retiring owners are to retain some involvement.
Employee/management buy outs
The right people are needed to drive the business forward. Employee buyouts may involve establishing an employee ownership trust which can be very tax efficient for the owner. Another advantage is the level of control the owner may have over the process as they are likely to set the price and timetable, and due to the existing relationship with the buyer, the process may be smoother.
The right people are needed to drive the business forward.
Engaging an experienced solicitor at an early stage will ensure you understand the steps involved in preparing your business for sale. They will guide you through the transaction and a good adviser will encourage a good, collaborative process with all involved, whether family members, employees or third party purchasers.
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