Transferring a business to a family member
Is family succession the right option?
It may be your dream to keep your business in the family but you need to consider the commercial implications of doing so. It's important to balance your emotions with hard reality.
Long before you intend to retire, you need to ask a number of key questions:
- Does your intended successor really want to take over - or do they feel obliged to do so?
- Does your intended successor possess the right skills and attributes?
- Is someone else in the business - eg a non-family manager - better placed to take your business forward?
- Will nominating your successor set up conflict in your business - perhaps between individual family members or with other employees?
- Will family succession provide sufficiently for your future?
- Will family succession be tax-efficient? Read more about tax implications of family succession.
You need to consider both your management and ownership roles before coming to any firm decisions. It may be that instead of family succession you should be considering other exit options, such as:
- a trade sale
- a management buy-out
- stock market flotation
- winding up the business
Read more about how to consider your exit strategy when starting up a business.
It can help to involve a third party in these important decisions. For example, a non-executive director or your business adviser can provide objective advice.