Posted: August 3, 2016
Last updated on September 28th, 2016 at 05:25 pm
In advance of Burgess Hodgson’s forthcoming succession planning seminar, tax consultant Margaret Connolly looks at this perennial tricky issue
You’ve toiled to build a successful business and are now looking to buy that dream house in France, drink red wine on the veranda and watch the sun set over the Pyrenees. But, before you take that step, you want to make sure the business – your business that you’ve sweated blood and tears to build – is in the safest possible hands.
Succession planning means different things to different people. It means being responsible for the future of a business that you have so passionately created and built. It also means being concerned about the future of the business that you have created. It’s a tricky and emotive subject that often sits on the ‘deal with tomorrow’ list for exactly those reasons, sometimes until it’s too late to do anything practical about it.
There’s no doubt that it’s a complex and potentially emoitionally-fraught issue. However with early and careful consideration, it need not hold any apprehension at all; in fact, proper planning will end up leading to an awful lot of peace of mind for entrepreneurs and owners of family businesses. It is often best done long before the time comes for the founder shareholders to step aside. At Burgess Hodgson, we find the longer time span between starting to consider the future of the business and ultimately making a transaction, the better prepared the shareholders and owners of the business are.
Succession can be achieved in many ways, for example, handing over the reins to the next generation whether they are family members or a dedicated and hardworking management team. It can mean buying out the shares of one of the older shareholders – or indeed a shareholder that has increasingly been faced with ill health. The remaining shareholders may not wish to see ownership of the business go outside the original group.
It can also mean undertaking an outright sale to either a third party purchaser or indeed a bank or private equity backed management buy-out. It can mean the segregation of discrete business activities and a demerging of such activities of different family groups or different shareholders, allowing each group to focus on aspects of the business they find more appealing and interesting.
Regardless of how succession is achieved, the amount of pre-transaction required can never be underestimated. It often takes up to two years to get a
business “transaction fit” – not only in terms of ensuring it is squeaky clean in terms of all compliance matters but to enable the best possible price to be achieved, if delivered through an external sale.
• Burgess Hodgson is holding a Succession Planning seminar on Wednesday, September 7th. Registration is from 7.30 at Cathedral Lodge, Canterbury. Speakers include Margaret Connolly and James Needham, founder of James Villa Holidays. To register your interest, email Rosie Le Seelleur at firstname.lastname@example.org.