Passing or selling the business you have set up to a son, daughter or other family member can be an attractive option. It allows you to maintain an involvement in the business and pass the assets to your heirs.
If you plan on handing the business on to your children then it can help to involve them in the business as soon as possible, allowing them to gain an in-depth understanding of how things work.
Allowing them to gain experience working in other businesses can be equally important, as this will give them new strategic insight into your activities.
However, you should bear in mind that you can't be certain that a child or other family member will definitely be interested in taking the business on in eg 20 years' time. If you're starting a business with the clear aim of passing it on to family, you should seriously consider how you could interest the relevant family members right from the start to reduce the possibility of them pursuing other options.
The Institute of Family Business has guidance on planning family succession that can help you prepare your exit strategy.
Get advice on family succession
A third party such as a non-executive director or business adviser can help you ensure emotions don't cloud your thinking. An accountant or solicitor can also provide valuable impartial financial and legal advice on family succession.
They can help you to answer key questions:
- Will family succession set up the potential for conflict within the business or family?
- Will it provide you with a financially secure future? Or, should you be considering other exit options to maximise your future income?
- Will it be tax-efficient?
- How will family succession affect the chosen successor's tax liabilities?
- How should you apportion shareholdings between the successor and other family members?