Advice on succession in family-owned businesses
Get advice from someone who has walked the walk.
Do you dream that one day you will see your children take over the running of the family business? If so, you're far from alone.
Many owners and managers of family businesses have a dream
that their children will eventually take over the baton
I always recommend that you start planning the succession of your company well in advance. It cannot be done too early. It may be your life's work you need to pass on. It may be a family business with proud traditions handed down through generations. And now it's the turn of your own children. A generational change in family-owned businesses is about handing over the company in the best possible way, so that the new ownership is best placed to continue the long-term vision of the business. At the same time, there is usually also an objective to minimise the tax consequences for all parties involved.
A compelling reason to start preparations well in advance is that there are advantages to making the succession while the transferring owner is still alive. A transferring owner and manager can assist in a transitional phase, supporting the business in the period before, during and after the succession. This will best ensure the business's operation and future during an otherwise uncertain and turbulent period.
In addition, there may be tax issues that both the new and outgoing owner or group of owners can usefully address well in advance of the formal succession, and which require the assistance of a tax advisor.
So plan the succession of your family business well in advance and enjoy the benefits it brings. I can help you with this, and point you in the direction of other specialists, such as lawyers, accountants and tax advisers, if the need arises.
You can book Eva Fischer as a speaker or consultant to your family- or partner-owned business. Eva Fischer can also be contacted about her work as a professional board member.
What is a generational change?
When the ownership of a family business is transferred to the next generation in the family, a generational change takes place in the family-owned business. A generational change in a business occurs when the ownership and management of a company or business is transferred from one parent to one or more of his or her children. The transaction is typically from parent to child/children. The operation of the business is thus taken over by the next generation in the family.
However, it is not unprecedented for the transaction to be between a ceding owner and a trusted employee. Such a transaction is typically done differently from a typical succession within the owning family.
Many issues arise in the context of a succession in a family-owned business - some of the typical issues are when the succession should take place, to whom the business should be transferred and the tax challenges associated with the transfer.
How to get started with generational change
The four main phases of generational change
A generational change needs to be well thought out and prepared for - whether it is a generational change in a family-owned business or a transfer to a trusted employee.
In order to safeguard all parties involved in the transfer as much as possible, the transfer of business can be divided into four main phases:
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