Young & Partners act for a high number of family businesses. Succession planning is often complex in family business as family dynamics and considerations run in tandem with financial interests.
Here are our top tips for business Dads considering if succession planning this fathers day:
If you plan to keep the business in the family:
Have the discussion. We often find that clients assume that their family members want to take over the business. In our experience forcing the issue can often demoralise family members and distract from their own future plans which can lead to resentment in the long term. Our team are happy to facilitate a business discussion with your family about this if you would like support to manage this.
Sometimes parity is not the same as fairness. If you have two or more children consider which (if any) of them has (a) already contributed a lot of time and effort to the business; or (b) is better at understanding the running of a business. Technical knowledge of the goods or services your business provides is one thing, but it is another to understand accounts, managing your staff, customer service etc. Shareholders do not have to be the same as the directors; you can benefit your children without giving them too much influence.
It might be beneficial to exit the business on a phased out basis. Whether you remain as an employee after you have been bought out by a third party, or supervise your family as they take over the business, this gives them time to “learn the ropes”.
Explore other options
If you have long standing and loyal employees it may be that no one knows the business better than them. You might want to consider selling your shares in tranches to these employees or some other incentive scheme to get other shareholders to follow that example and help grow the business long term. You can read a recent blog about feasibility funding to explore this here.
Young & Partners have a skilled team in business sale, acquisition and merger. If you would like to discuss any aspect of support please do not hesitate to contact me by e-mail, by telephone 01383 721621 or on LinkedIn.