Family Business Succession Planning
Our expert team can advise you on the full spectrum of business matters.
Family run business make up a large proportion of the Scottish economy, with over 55,000 in operation. While there are many success stories, with some businesses now into their fourth generation of family management, there are some that will not make it into the second generation.
Most families in business together know that, at some point, they are going to have to sit around a table and talk about plans for the future of the business. Many, however, don’t know where to start and put off having discussions about family business succession which can often mean that it never gets done. As a result, the business often only passes over to the next generation upon the death of the previous generation. Where there has been no succession planning, and there are many people involved, this can cause strained relationships and disruption to the profitability of the business itself.
Our expert family business succession planning solicitors can provide you with specialist and practical advice to ensure you make the right decisions about the future of your business. Call us today on 01465 713118 or fill out our online enquiry form.
Things to Consider When Thinking About Succession Planning:
Who is Going to Take Over?
For a business to continue successfully it is vital that you have the right people ready to take over. Not all family members will want to be part of the business, and therefore it is not wise to put them all in a position of management. While it can be difficult, it is important to sit down with the relevant family members and discuss the extent to which they want to be involved in the business, if at all. Once you have made this determination, you can then take the next step forward with your succession planning.
Are They Ready?
While those involved may have confirmed to you that they want to be part of the business going forward, it is imperative that you ask yourself if they are ready. While they may have worked for the business for several years, there are considerations you should take into account; do they have the management experience necessary and do they understand how the finance works? This is a further discussion that needs to take place with those that are going to take over. Training both in-house and externally should be considered to help the next generation develop the skills necessary to keep the business going. It is also advisable that there is a period of handover where the new management work alongside old management to learn the appropriate skills required to keep the business running well and remaining profitable.
Will you Still Play a Role in the Business?
If you have been running your business for a long time, it will be difficult to step back and let others lead. After all this business has been your “baby”, you have helped it grow and had to deal with the challenges it has presented as it has developed. If you wish to continue to play a part in the business after handing over the reins, it is vital that you put this into any succession agreement. This can be a complicated and confusing process and it is highly recommended that you seek expert legal advice.
Management Buy Out
For some family businesses, there may not be any family members willing to take over control. In those circumstances, it can be necessary to look towards the staff themselves and see if there are some of them that wish to take over the business. In these circumstances, you may have to look at how best to assist them in raising any finance necessary to help with the buyout.
Can the Business Continue?
One of the most important questions in succession planning is whether the business can continue or not. As a founder of a business, you have its best interests at heart and want to see it continue to thrive. However, there comes a point where you must be objective and ask yourself if the business can continue and remain profitable, or has it reached the end of the road and should be wound up. This is a difficult subject and should be discussed with the help of experts such as an accountant.
Contact The McKinstry Company Family Business Succession Planning Lawyers, Ayrshire and Dumfries and Galloway
Before any substantial discussions can begin, the family needs to sit down with their solicitor and accountant to understand their current legal position.
Our Partner, Debbie Dunlop, has the STEP advanced certificate in Advising Family Businesses and can provide expert legal advice concerning family business succession. To arrange an appointment with Debbie and discuss your circumstances, either in Ayr or Girvan, please call 01465 713118 or email firstname.lastname@example.org.
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