Keep it in the family? …or not
“I have a sentimental weakness for my children and I spoil them, as you can see. They talk when they should listen.”
– Don Vito Corleone, The God Father
It can take many years to build a successful business, and transferring ownership or even management to the next generation can be a tough challenge (particularly for the family head who has nurtured the venture from perhaps ground zero).
Indeed transfer of the business to the next generation may not be the most appropriate way to go and other strategies including trade sale, management buyout or operation under non-family management may be appropriate to at least consider.
The succession planning is something that is often briefly talked about, but often put to one side for another day. Careful planning today can assist in setting family expectations with regard to control, ownership and financial contribution (if any) for the business.
It is also important to have the right structure in place to avoid potential large capital gains, stamp duty and loss of control. For example family business are often ultimately owned by discretionary family trusts and therefore it is the control of the trust (rather than direct ownership of the business) that needs to be addressed. In these situations there are no shares or units to transfer in part to interested parties.
Where we can help?
- Understand and explore the current owners personal goals and expectations
- Explore the options
- Choose a family member to run the business
- Appoint someone with appropriate skills from outside the family to manage the business
- Sell or wind up the business
- Keep working and running the business yourself – do nothing
- Understand the tax consequences of various scenarios
- Work with family members and management to achieve a smooth transition
- Assist at a board level to ensure that board meetings run effectively and efficiently
- Estate planning, Wills and self managed superannuation funds
Family Business Specialist